Ventura Tax Preparation: Tax Deductions and Tax Credits

2015 will end in a short 7 weeks. Will any of your recent life changes affect your tax situation? Each year people miss out on tax deductions and credits they qualify for. Many things you do and pay for during the year can save you money at tax time, but they’re often overlooked or forgotten about by the time tax season rolls around. We’re detailing several big life events which may help you receive tax credits and deductions, but there are also other common activities such as charitable donations or job search costs which can work in your favor while filing taxes.

Getting Married:  If you marry by midnight on December 31, 2015, your filing status will change to either married filing jointly or married filing separately. Which one is more beneficial to you?  And don’t forget, if your name changes, you must notify the Social Security Administration of the change before using your new name on a tax return.

Birth or Adoption of a Child: This will give you an extra exemption for the entire year. It may also qualify you for a multitude of credits, such as the Earned Income Credit, Child Tax Credit, Additional Child Tax Credit, Child/Dependent Care Credit, Adoption Credit, and/or Head of Household filing status.

Buy a Home: You can deduct the mortgage interest paid during 2015, plus property taxes and possibly points or mortgage insurance premiums.

Sell Your Home: If you sell your home at a profit and meet certain qualifications, you can exclude $500,000 in gain if you are married filing jointly ($250,000 if single or married filing separately).

Divorced Your Spouse: You’ll file as single if you’re separated by December 31st by a final divorce decree or a final decree of separate maintenance. If you have at least one dependent child, you may be able to file as head of household. Alimony payments are taxable to the recipient, and deductible to the payer.

Go Back to College: The American Opportunity Credit, the Lifetime Learning Credit, and/or the Tuition and Fees Deduction can be claimed on qualified expenses of an eligible student. And don’t forget that up to $2500 in student loan interest can be deducted, subject to limitations.

Are you eligible for some of these benefits and credits? Tax code can be very complicated to navigate, and a good rule of thumb is to keep a record and receipt of any costs you incur during the year such as medical expenses, moving expenses, and energy efficient home improvements, anything which you think may help you during tax time. The average adult working in the US in 2015 could pay over $350,000 in taxes over the course of their lifetime, we’ll help you keep this number as low as possible. Contact Martin, Ketterling & Associates services in Ventura, CA for help identifying new credits, deductions, and for all tax consulting and financial services.