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| Kathi Koenig, CPA Partner at McGowen Hurst Clark & Smith, P.C |
College costs—if
you are still taking classes, you may be eligible for different credits or
deductions for the tuition, fees, books and required supplies that you are
incurring. Depending on how many classes
you are taking and if you are going for your undergraduate degree or just
expanding your job skills, you should be sure to find out if you are eligible
for the American Opportunity Credit, the Lifetime Learning Credit or the
tuition and fees deductions. The American Opportunity Credit is the most
beneficial but is only available to undergraduate students who are going to
school at least half time. This credit
can be 40% refundable which means you could get money back even if you didn’t
owe any taxes.
If you are out of school, but still paying student loans,
then your student loan interest is a deduction that you may be able to take if
your income is below certain levels. For
2013, your adjusted gross income has to be less
than $75,000 if you are single or $155,000 for married filing joint
taxpayers.
A Job - Getting a
job may mean that you have job hunting
costs that are deductible. Or if you
have a job, you may have employee expenses that are not reimbursed by your
employer, but you can take as a deduction such as those networking costs,
computer /software costs or other business expenses. To realize most of these deductions you will
need to itemize to receive any benefit.
Marriage - Now
that you are married, you can file married joint or married filing
separately. In most cases, it is
advantageous to file together, but you will want to “do the math” to see if
there might be an advantage to filing separately. On the Iowa return, it is most often
advantageous to file married separate, unless you have one taxpayer with no
income.
Children - You get $3,900 exemption for each dependent. You also get a $1,000 credit for each child
under the age of 17 at the end of the year.
Also, if you have daycare costs that enable you to work, you can receive a child care credit of up to
$3,000 for one child and up to $6,000 for two or more children.
Buying a House - As
you probably know, mortgage interest is deductible and it is the deduction that
usually makes it possible for you to itemize, instead of taking the standard
deduction. Along with the mortgage interest, you are also
able to deduct property taxes you pay for your home. And if you paid any points to purchase your
house, the points are deductible as well. Another lesser known deduction is the
interest paid on a home equity loan.
Because it is deductible, I often recommend that clients use a home
equity loan to purchase their car or pay off credit card debt or other consumer
loans.
These are just some of the deductions that might help make
your life changes even sweeter. So be
sure to discuss any new changes with your tax advisor, or research the rules yourself
so that you can take full advantage of any tax savings that might be available
to you.
Authored by:
Kathi Koenig, CPA
Partner at McGowen, Hurst, Clark & Smith, P.C.
515-288-3279
