5 Tax Breaks You Don't Want To Forget

With tax season in full swing, make sure you take full advantage of every deduction.

Mar 16, 2014 at 11:00AM

Taxes

Now that tax season is in full swing, most Americans are trying to find every last deduction and credit that applies to them to reduce their tax burden, or hopefully to maximize their refund. Here are a few often overlooked tax breaks you don't want to miss.

Are you claiming all of your charitable contributions?
It's not big secret that you can claim any cash or gifts that you donated to charity. However, many people forget to claim the little expenses, which include any costs you incur while performing a charitable act.

For example, if you drove 20 miles each way to a Goodwill store and donated some old furniture, the IRS allows you to deduct 14 cents per mile. Did you mail a monthly check to your favorite charity? Those 12 stamps qualify as a deduction. If you are a frequent contributor to charitable organizations, it may be worth checking out the full IRS guidelines.

Moving expenses: more than you think!
If you moved this year for a new job, or a change in location for your current job, most of your out-of-pocket expenses are tax deductible. Your new workplace must be 50 miles further from your old home than your previous job, and you must work full-time for at least 39 weeks during the first year following your move. The full list of rules and limitations can be found here.

While a lot of taxpayers know that moving expenses are deductible, few actually take advantage of all of the deductions to which they are entitled. Almost everything is deductible besides meals, so make sure to save all of your receipts. If you rented a truck, paid movers, stayed at a hotel on the way, paid tolls, bought packing supplies, or incurred any other incidental expenses, you could significantly reduce your tax liability.

Did you serve jury duty?
This is a very little-known tax deduction that may not be worth tons of money, but hey, every little bit helps. If you served on a jury last year, and your employer paid your full salary while you served, chances are that you were required to turn that money over to them. The catch is that jury duty pay is reported to the IRS as taxable income, and a lot of people forget to write it off as an itemized deduction.

Sales tax or state income tax?
Most people know about this one, but which should you choose? In states where there is no income tax, it's a no-brainer, but in most states you have a decision to make here. 

The IRS provides tables that show how much sales tax you can deduct, but if you made certain major purchases like a vehicle, you can add the sales tax you paid to the total. The IRS even has a calculator that helps you estimate the deduction before you file your taxes.

When it comes to state income taxes, of course you can deduct the state taxes withheld from your paychecks, but don't forget about last year! If you ended up owing the state money when filing your 2012 return (which you paid in 2013), that can be added to the total. For self-employed individuals and those in higher tax brackets, this could be huge.

The retirement tax credit
In my opinion, this is one of the single biggest reasons that younger people should start early when saving for retirement. This credit is no good for those taxpayers who have adjusted gross incomes above $28,250 ($56,500 for couples), but it's great for lower-income individuals.

If you qualify, you get a credit of 50% of up to $2,000 in retirement investments that you make throughout the year, in addition to the tax benefits that come with IRAs. In other words, after you get the credit, it's like paying $1,000 for a $2,000 investment for your future!

Now, put that big refund to work!
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers