Top 5 Missed Deductions that Young Working Adults Should KnowFeb 21, 2019 | 0 Votes by Justo - rate If you're a young working adult, you can maximize your returns with these useful tips!
What if someone told you that you can have some extra cash flow by knowing and applying some simple tax deduction tips? If you are a young working adult every penny counts, so we have gathered 5 of the most relevant missed deduction all young professionals should know. Keep reading so you can have some of the money you already paid back!
State sales taxes deduction
If you live in a state which doesn't impose an income tax law, this is for you. You got to take your pick, either to deduct state and local income taxes or state and local sales taxes. For the most part, you should aim to deduct the income taxes because it's a better return. The IRS established some parameters for residents on those states which show the amount of deduction you are entitled to.
If you acquired a transport, boat or airplane, you get to attach the state sales tax you spent to the value given in the IRS charts for your state, to the extent the sales tax charge you paid doesn’t pass the state’s general sales tax rate. Besides, you can apply the same criteria for your home building materials.
If you need additional help to calculate your deductions, the IRS has a calculator to assist you, which changes according to the state and income level. Your full deduction for state and local taxes is restricted to $10,000 per year. You are allowed to subtract state and local sales tax or state and local income taxes, but you can't deduct them both.
Student loan interest paid by your parents
When the parent used to pay the interest for the student loans of their children they didn’t get back any tax return. If the student didn’t pay them personally they were out of luck. But now there is a way around it, as the money provided by the parents is now seen as a loan from parents to their children, who then cancel the loan themselves. So now you can deduct up to $2500!
Did you move to take the first job?
If you are hunting for a new position those expenses are all on you, and they are not deductible. But if you are moving out of your area to take a new job those expenses are deductible. for example, if you drove 50 miles or longer to get supplies for your household, you can deduct 23 cents per mile, parking fees, and tolls. But starting 2018 this only applies to persons in the military.
Earned Income Tax Credit (EITC)
This is credit which many people overlook or simply ignore. This is designed to complement low to moderate income worker, but this applies basically to everybody. If you are middle class and you lost a job, got a pay cut or even just worked a low amount of hours in the past year you can apply for this one as well.
You need to take into consideration your general income, your marital status, and the size of your family. To grab this credit, you will have to file a tax return. It doesn’t matter if you don’t owe any taxes and you file them up to three tax years later.
State taxes paid last spring
If you owe when you filed your tax report for the previous year, remember to add those numbers with your state tax full deduction on your 2018 return, simultaneously with state income taxes kept of your paychecks or given via predicted quarterly payments. Keep in mind the limitation established at the beginning of 2018 which dictates that the deduction for state and local taxes is restricted to $10,000 yearly
All in all, having some extra cash flow could solve some of your problems, and an easy fix is to claim your tax returns! There is no need to overpay, you just have to do your taxes and file your report in the expected date.