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5 Commonly Overlooked Tax Relief Options

For many people, tax season is a particularly stressful time of year. Many Americans have difficulty affording their tax payments, and the idea of tax debt can be a frightening prospect. Fortunately, there are a number of different types of tax relief available to taxpayers in the form of deductions. However, because of the complexity of the tax code, most people are unaware of these deductions. The following list is meant to make some of the most commonly overlooked deductions more well-known:

  1. Charitable contributions – Many people are aware that charitable contributions are tax deductible, but may not fully understand the extent of this form of relief. For instance, physical donations, such as clothing and food, can also be deducted, as can the cost of gas used in assisting a charitable organization.
  2. Reinvested dividends – For most investors, mutual fund dividends automatically apply to buying new shares. This increases an individual’s tax basis in the fund. It is important to include these reinvested dividends in basis results, or else the dividends may be taxed twice.
  3. American Opportunity Credit – College students are allowed to claim as credit up to $2500 in college tuition costs for all four years of school. If this amount is more than an individual’s overall tax liability, up to 40% of this credit is refundable, which equates to $1000 in savings.
  4. Energy-saving home improvements – Up to 30% of the cost of energy-saving home improvements can be deducted, up to $500 in total value.
  5. Job hunting expenses – Trying to find a new job can be an expensive process. Fortunately, many of the costs of job hunting, including travel, lodging, and printing, can be deducted from tax returns.

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