Forgotten tax deductions could save you thousands

PHOENIX - If you're ready to file your income taxes, wait!    

Whether you've had a job loss or your mutual fund investments are doing well, you could be missing an important tax break.

Like the Earned Income Tax Credit.

It's a tax credit refund for lower incomes. And the crazy part, nearly 25 percent of those who qualify, don't claim it.

The amount depends on income, family size and marriage status.

So a single worker with no kids making less than $14,340 can receive $487.

A couple with three or more kids making less than $51,567 could get the maximum allowable amount, $6,044.

If you don't owe any taxes you still must file to get the refund.

How about reinvestment dividends?

It's not a deduction, but could save you money down the line.

If you've got mutual funds where the dividends automatically buy extra shares, the more you gain, the more your tax hit could be when you eventually redeem those shares.  

Tax experts say the reinvestment process means you were already taxed.

So, include that in your tax basis.

That way, you won't be taxed again later when you eventually redeem those shares.

And there are a couple of tax breaks if you pay your kids' student loans (for the kid!) or you refinanced your house.

If parents pay back a student loan, your child can qualify to deduct up to $2,500 of interest.

But the child can't be claimed as a dependent. And no, mom and dad can't get the deduction because they weren't liable for the debt.
 
If you refinanced your home, don't forget to deduct the points.

But, it has to be over the life of the loan.

So if it's a 30-year mortgage, you can deduct 1/30th of it this year.

That's $33 for each $1,000 of points you paid.

For more tax information, go to IRS.gov and search for your topic.

E-mail me if you need my help, or "like" my Let Joe Know Facebook page and tell me about the issue there.

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