Brett Sholtis for YDR.com writes: Tax season is upon us, and though it may seem far away now, that April 15 deadline will be here soon.
Whether you have a trusted tax accountant or you process your own taxes, it's always possible that you're not getting the most out of your annual return.
Claire Weaver, a shareholder at the accounting firm SF & Company, highlighted five deductions that she said many people don't know about. While not everyone has a child in college or investments in a brokerage company, she said one or two of these deductions is likely to save you money.
Education creditsWeaver said most full-time students are aware of the American Opportunity Credit, which can be up to $2,500 per student, though only undergraduate college students with a set number of class credits are eligible.
However, there's also a Lifetime Learning Credit, which has fewer restrictions, as well as the option to go with a tuition and fees deduction.
"People have to see which one they can use on their return, and which one gives them most benefit tax-wise," Weaver said. "In situations like this, where you're trying to maximize your tax package, it's beneficial to have software to see which one gives a bigger return."
If you donate a security that has increased in value...Weaver said this is one of the most commonly underused opportunities for those with stocks who also give to charity.
Let's say you bought a stock for $1,000. Its value increased, and you want to sell it for its new value, $3,000.
Normally, you have to pay a capital gains tax on the sale.
"If you're charitably inclined, and you're someone who may ordinarily give that $3,000 to charity, you don't have to pay the capital gains on that stock, as long as you transfer it straight to the charity," Weaver said.
So instead of selling the stock, paying taxes and ending up with a sum less than $3,000, you're able to donate the entire amount. Of course, you're also able to write off that charitable giving when you file your taxes.
Foreign tax creditWeaver said that the foreign tax credit is probably the second most commonly overlooked deduction, because people with mutual funds and other investments tend not to sift through the individual stocks in their portfolio to see if they're foreign.
Basically, your investment statement will indicate if you paid a tax on a foreign stock. If so, you can take a credit on that return.
Though this credit may also apply for those with foreign properties, Weaver said you primarily see this situation when somebody has investments in a brokerage company. If there's any tax that's paid and it shows up on your brokerage statement, you can take a tax credit on that on your return.
"Take the time to look at your brokerage statement," Weaver said. "You may not even know that you have some foreign stocks."
Job hunting costsIf you're looking for a job and you incur expenses buying plane tickets, driving, or even buying things directly related to the job search, you can deduct those costs.
However, Weaver said that the deduction is only good for jobs within "your current occupation." As she put it, if you're an engineer looking for a new engineering job, you're good to go. If you're an engineer trying to become a Broadway star— sorry, you're going to have to foot the bill on your own, without a tax credit.
Weaver said that you don't even have to be unemployed while searching for a new job. You can still claim the credit.
Mortgage insurance premiumsMany homeowners pay mortgage insurance, and Weaver said you'd be surprised how many people overlook this deduction.
"Normally, this shows up on the 1099 you get from the insurance company," Weaver said. "Even though it's called a mortgage insurance 'premium,' the amount that you pay each year is deductible."
To be fair, she said people sometimes confuse mortgage insurance with homeowner's insurance, which is not deductible.