Commonly Questioned Tax Deductions

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Posted on 03/15/2011

Tax day is quickly approaching. And you probably deserve a break—lots of them, in fact. Tax breaks, or write-offs, are a way to reduce your tax obligation and possibly boost your refund. But plenty of people are confused about them. Here are some commonly questioned tax deductions.


Energy Efficient Products - When Congress passed the Energy Policy Act of 2005 many consumers became eligible for write-offs. The Tax Incentives Assistance Project is designed to give consumers and businesses information to help them take advantage of government incentives. Check out the list of qualified upgrades and products at energytaxincentives.org.


Education Expenses - Some of your higher education expenses could be eligible for learning credit. Some taxpayers can take a tax break of up to $4,000 worth of tuition and fees. Check out IRS.gov for information on education credits.


Adoption - The maximum adoption credit has been increased thanks to the health care law. The credit increased to $13,170 and it’s now refundable so even if you don’t owe taxes you can still get that money back.


Medical Expenses - Plenty of medical expenses can be deducted including doctor’s bills, drugs, prescription eyewear, nursing home charges and more. Keep in mind though that if you use a flexible spending account or a health savings account you can’t also make those deductions.


Mortgage Interest Payments - Good news for homeowners (finally!) who pay interest on their home loan. Typically mortgage interest payments can be deducted for those who qualify. There are some factors to consider such as the date and amount of the mortgage.


Auto Mileage - If you use your car for business use you can deduct the mileage from your taxes. The 2010 rate is set at 50-cents a mile, down from 55-cents in 2009. If you use your car for medical care or for moving because of your job you can deduct 16.5-cents per mile. If you drive for charitable purposes you can deduct 14-cents a mile.


By Alison Storm


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