Love those tax deductions, because their days could be numbered.
If you followed the “fiscal cliff” debate on taxes in December, you might be shocked at tax time this year to see your favorite deductions and credits still remain.
Many that have been discussed are favorites for individuals: deductions for giving to charity, for your mortgage interest and for the money you put into a 401(k) among them.
But as tax reform takes shape in the months or years ahead, some could disappear. So make sure you claim all you can at tax time this year.
Some of the most-claimed tax deductions for families are the following:
—Child tax credit: This was going to be cut to $500 from $1,000 per child under the threat of the fiscal cliff last year. But it survived in full. It means that if your income is within the limits, you can get a credit of $1,000 per child.
— Earned income credit: Add this to the child tax credit if your income is relatively low, and you might get money back from Uncle Sam. There are income cutoffs such as $50,270 for a married couple with three or more children, or $36,920 if you are single with one child. The maximum credit for a single taxpayer with a child is $3,169, according to Ernst & Young. A low-income taxpayer with no children could get a maximum of $475.
— Day care: Working parents who need care for children younger than 13, or older people too disabled to care for themselves, can get a credit for expenses such as day care.
— College: You can get up to $2,500 through the American Opportunity Credit, to help pay for a college or technical education for yourself, spouse or your children. It can be applied to each of four years of college. For the full credit, individuals need adjusted gross income of $80,000 or less. For married couples it’s $160,000; you can get some credit with higher incomes. Also, parents or students with college loan interest can deduct interest payments. If parents’ income is too high, the ex-student may be able to use the deduction.
— Medical expenses: You need a lot of these to make them work for you because you can only claim them if they are over 7.5 percent of your adjusted gross income. But by adding expenses you may not think qualify, you might just get there. Medical and dental expenses count and self-employed health insurance does too. Procedures like smoking cessation, weight-loss programs and laser eye surgery can be used if your doctor requires them, according to the 2013 Ernst & Young Tax Guide. Remember that you can also claim travel expenses (like mileage and parking) for any doctor visits, tests or treatments.
— Charitable contributions: These are still alive and well. And if you didn’t give money, but instead gave items like clothes, computers or household items to a valid charity, they count. Seniors should be aware that if they gave to a charity directly from individual retirement accounts, and used those gifts as annual distributions, those gifts cannot be claimed for the charitable deduction.
— Homes: You can deduct your mortgage interest and property taxes paid in 2012, and if you refinanced your home, remember that you can deduct the points you paid. If you’ve become a landlord of a home or condo, you can deduct expenses and travel related to caring for and renting the property. Rules are in the Internal Revenue Service Publication 527.
— Job changes: Resumes, travel to find a job, and other job-hunting costs can be deducted if you itemize on your tax return, have solid records of the expenses, and stay within an IRS rule related to 2 percent of your adjusted gross income. Also, if you moved to take a new job, your moving expenses can be deducted.
— State, local taxes: You can deduct state and local taxes, including some fees. If you live in a low- or no-income tax state, consider deducting sales taxes you paid.
Gail MarksJarvis is a personal finance columnist for the Chicago Tribune and author of “Saving for Retirement Without Living Like a Pauper or Winning the Lottery.”