These smart moves can minimize your payout—or score you a sweet refund.
See If You’re Eligible for These Clever Deductions
In addition to tax credits, stay on the lookout for deductions you can take. A deduction reduces your taxable income, which increases the chances of a lower overall tax bill. Read on; some of the ones listed here might apply to you.
Does someone in your family require extensive medical care? If your medical expenses exceed 10 percent of your adjusted gross income, you may be eligible for a deduction, says Rebecca Walser, a tax attorney, certified financial planner, and the author of Wealth Unbroken, but you must itemize your deductions in this case. New-mom gear, such as breast pumps and lactation equipment, can be included. And if you pay tuition for special education for a child with special needs, that too can be deductible if the curriculum is considered medically necessary, Sher says. (This is a highly scrutinized deduction, so check with your tax pro before you take it.) Going forward, consider funding a Health Savings Account, says Mark Kohler, a senior tax advisor with TaxSlayer, a tax preparation and financial technology company. The money you deposit in the account both grows tax-free and comes out tax-free for qualified family medical expenses. You also get a tax deduction for contributions on your tax return.
Health Insurance, If You’re Your Own Boss
“If you are self-employed you can deduct one hundred percent of the cost of health insurance for yourself,” Walser says.
It’s the rare family that doesn’t move at some point, but are the expenses related to a relocation deductible? It depends, Sher says. “You must move more than fifty miles away, and you must remain employed for thirty-nine weeks of the next fifty-two week period,” he explains. FYI, this is the last year that this deduction can be taken; it’s being swept away for 2018 with the new tax reforms we’ve all heard so much about.
Like medical expenses, these need to be itemized. And you will have to have launched a truly extensive search for new employment: You aren’t eligible for a deduction unless the costs exceeded 2 percent of your AGI.
New York State 529 Plan Contributions
“Anyone who is making a New York state 529 plan contribution should be taking the eligible deduction, which is up to ten thousand dollars for a married couple filing jointly,” Sher says. Though this account has been used to save for children’s college tuition up until now, beginning in 2018 contributions can also be used toward private school tuition.
Want more pointers? Consult your favorite tax professional. He or she can help you formulate a strategy to make tax time far less taxing on your family.