By S.E. Slack
Thinking about buying a new home near a beach location once you retire? Although you may find the place of your dreams, you’ll have to make quarterly estimated tax payments. You will need to sock away more in savings to keep the IRS happy. Didn’t know about those estimated quarterly payments? Request a waiver to skip the $1,000 penalty. Here are five more ways to avoid some pesky tax rules that cost you money.
Home energy improvements are still worth making. Homeowners can find up to $500 in the energy savings tax credit for certain improvements to their home. For large, qualified improvements, such as the installation of solar water heaters, as much as 30 percent of the total cost can be claimed. Energy-efficiency can also be a great feature to highlight when it comes time to sell the home.
Business travelers can claim airline fees for baggage and changed travel plans. If you ship your baggage ahead of time, you can probably claim that, too. Keep receipts and deduct the expenses using Form 2106 or 2106-EZ.
Students of all ages can take advantage of the Lifetime Learning Credit. Up to $2,000 annually can be deducted for the cost of post-high school education that is designed to help people find new job skills or improve current skills. This tax-saver phases out as income rises, so check with the IRS to confirm how much you might qualify to deduct.
Children who are not claimed as a dependent on their parent’s income taxes can qualify to deduct up to $2,500 of student loan interest – regardless of whether or not mom and dad are actually repaying the loan. Because the student is the one responsible for the debt, he or she is the only one who can claim the interest deduction.
And most job hunters can find some solace in the fact that transportation expenses incurred during a job search can be deducted in many cases, regardless of whether or not a new job has been secured by the time April 15 rolls around. Get the details on these and other deductions at www.irs.gov.