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7 Most-Missed Tax Deductions and Credits

From job search expenses to gambling losses, don't overlook these ways to cut your tax bill.

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A magnified 1040 tax form for filing yearly income taxes
Alamy
By Lisa Greene-Lewis

Do these deductions and credits apply to you?

Tax deductions and credits can save you money at tax time, but many taxpayers miss them because they don't realize things they do in their everyday life can lower their taxable income. Here are seven of the most-missed tax deductions and credits you don't want to overlook.


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What is IRS Form 8824: Like-Kind Exchange

Ordinarily, when you sell something for more than what you paid to get it, you have a capital gain; when you sell it for less than what you paid, you have a capital loss. Both can affect your taxes. But if you immediately buy a similar property to replace the one you sold, the tax code calls that a "like-kind exchange," and it lets you delay some or all of the tax effects. The Internal Revenue Service (IRS) uses Form 8824 for like-kind exchanges.

What are ABLE Accounts? Tax Benefits Explained

Achieving a Better Life Experience (ABLE) accounts allow the families of disabled young people to set aside money for their care in a way that earns special tax benefits. ABLE accounts work much like the so-called 529 accounts that families can use to save money for education; in fact, an ABLE account is really a special kind of 529.

What is IRS Form 8829: Expenses for Business Use of Your Home

One of the many benefits of working at home is that you can deduct legitimate expenses from your taxes. The downside is that since home office tax deductions are so easily abused, the Internal Revenue Service (IRS) tends to scrutinize them more closely than other parts of your tax return. However, if you are able to substantiate your home office deductions, you shouldn't be afraid to claim them. IRS Form 8829 helps you determine what you can and cannot claim.

What is IRS Form 8859: Carryforward of D.C. First-Time Homebuyer Credit

Form 8859 is a tax form that will never be used by the majority of taxpayers. However, if you live in the District of Columbia (D.C.), it could be the key to saving thousands of dollars on your taxes. While many first-time home purchasers in D.C. are entitled to a federal tax credit, Form 8859 calculates the amount of carry-forward credit you can use in future years, not the amount of your initial tax credit.

What is IRS Form 8379: Injured Spouse Allocation

The Internal Revenue Service (IRS) has the power to seize income tax refunds when a taxpayer owes certain debts, such as unpaid taxes or overdue child support. Sometimes, a married couple's joint tax refund will be seized because of a debt for which only one spouse is responsible. When that happens, the other spouse is said to be "injured" and can file Form 8379 to get at least some of the refund.

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jaidacole

I have a little tip for saving on taxes. Move to a state with lower income taxes. This one step can save you thousands a year, and you don't have to change any other aspects of your life. Also invest in tax deferred assets. Even life insurance can grow tax deferred and pay you dividends. I have a nice little policy from LifeAnt that should net me about 4-6% tax deferred over the long run. The more money you keep from the government, the more you have in the end. Its not even about being creative, the information is all right here for us, its just about being smart.

April 01 2014 at 11:04 PM Report abuse rate up rate down Reply
SPQR

You all must not have heard that the President has and is focusing on helping what is left of the middle class....please...help is on the way !!!!

Warren Buffet is going to help everyone with something I heard him say he would pay more taxes!!!! Just grab a beer and watch tv and relax everything will be ok.

April 01 2014 at 9:03 PM Report abuse rate up rate down Reply
Robert

Look, I got married last year, it didn't work out. She left me and took everything I had. May I write that off as a gambling loss? ... or an education deduction - I learned more about human nature in 7 months than I learned in 5 years of college.

April 01 2014 at 4:29 PM Report abuse +6 rate up rate down Reply
2 replies to Robert's comment
SPQR

I think that falls under natural disasters ! Like being hit by a hurricaine and not being covered by insurance

April 01 2014 at 9:04 PM Report abuse rate up rate down Reply
annrcpa

Unfortunately unworkable marriages do not constitute gambling or education losses. Did you get divorced before December 31? If so, you will have to fill as a single with only the single standard deductions and exemptions. Sorry, I was in a disasterous relationship once too, There just is no tax advantage. Unless when she cleaned you out you reported to the police and they wrote up a report. Then, this is stretching it a little, you could file for a deduction of casualty and theft losses.

April 03 2014 at 2:02 PM Report abuse rate up rate down Reply
otwpalm

It is past time for a major overhaul of our tax system. This year's forms are the worst I have seen in 50 years. The easy solution is to vote all incumbants out at every election. Sooner or later the thieving ba$tards will get the message.

April 01 2014 at 2:35 PM Report abuse +6 rate up rate down Reply
1 reply to otwpalm's comment
acmeme

Hope fully!

January 19 2015 at 9:32 AM Report abuse rate up rate down Reply
bill perry

Revise the MODEL "A" Tax system we have today. Help everyone earning less than $40,000 a year. NO TAX. Eleminate taxes on SS income. Everyone should pay FICA taxes including Millionaires, but if they earn more than $150,000/year at retirement, they should not be allowed to collect SS payments. It would solve the SS problem, reduce the deficiet and make many Americans Happy that they live in AMERICA. In addition, Congress must abide by these rules. NO MORE KINGS in AMERICA... Bill Perry

April 01 2014 at 1:01 PM Report abuse +1 rate up rate down Reply
4 replies to bill perry's comment
Max Lilly

Death and Taxes, hmmmm, choices, whether you are Union or Confederate, taxes can make WAR and lose 650,000 young men's lives.

April 01 2014 at 12:53 PM Report abuse +2 rate up rate down Reply
1 reply to Max Lilly's comment
acmeme

Remember the officials that voted for tax increase. Get rid of them

January 19 2015 at 9:40 AM Report abuse rate up rate down Reply
knbreid630

Watch out for that gambling deduction...if your winnings put you into the next higher bracket, even the loss deduction won't help much...Higher payback percent !!

April 01 2014 at 11:06 AM Report abuse +2 rate up rate down Reply
bdgrizcp

If your bounceback college grad moved back in, you may be able to claim Head of Household status (irrespective of your filing status) and pick up 1/2 a deduction. This works if he/she files their own return.

April 01 2014 at 9:23 AM Report abuse +1 rate up rate down Reply
Laz Brunelleschi

Oh please---Unless you own a home and pay a lot of mortgage interest and high property taxes or you have an astronomical amount of medical bills that are not covered by health insurance, you may find that all these deductions will get you nowhere because you don't benefit from itemizing deductions unless your grand total is higher than the standard deduction which is currently $6100 for a single taxpayer.

April 01 2014 at 9:03 AM Report abuse rate up rate down Reply
1 reply to Laz Brunelleschi's comment
arubadooba

yep, itemized deductions are for med, dental, charities, & mortgage; i only got to use them once in the last 7 years. now, it's std deduction & no bother w/ donations, med bills (i have few...for now) which can't reach the 10% of AGI, or job costs. middle class & unemployed are always in the drain.

April 01 2014 at 8:07 PM Report abuse rate up rate down Reply
Laz Brunelleschi

Unless you own a home and pay a lot of mortgage interest and high property taxes or you have an astronomical amount of medical bills that are not covered by health insurance, you may find that all these deductions will get you nowhere because you don't benefit from itemizing deductions unless your grand total is higher than the standard deduction which is currently around $5800 for a single person.

April 01 2014 at 8:59 AM Report abuse rate up rate down Reply