Increase your tax refund with these deductions

The 2017 tax season kicked off on January 23, when the IRS began accepting electronically filed tax returns. Last year, about 73% of all filers received a tax refund, averaging $2,857, and likely to be about the same this year.

The following 10 deductions will double your tax refund:

Form 1040 – 2016 Tax Return

Line 25 – Health Savings Account Deduction

An HSA allows account owners to pay for current health care expenses and save for those in the future. HSAs have no limit on carry-overs or when the funds may be used.  For 2016, an individual may contribute up to $3,350; for a family, that amount is $6,750.

Line 26 – Moving Expenses: 

If you moved more than 50 miles for a new job and weren’t reimbursed by your employer, you can deduct those moving expenses.

Line 32 – IRA Deduction

You’re allowed to contribute up to $5,500 a year ($6,500 if you’re 50 and over) to an individual retirement account.

Line 33 – Student Loan Interest Deduction

Student-loan interest is deductible up to $2,500, regardless of whether the parents or the students paid them.  Find the amount of interest paid on your student loans on form 1098-E.

Line 34 – Tuition and Fees Deduction

You can deduct education expenses (books, courses, etc.) to the extent that they required by law or your employer or if they are needed to maintain or improve your skills.  The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000.

Line 49 – Child and Dependent Care Expenses

If you incur child care costs in order for you or your spouse to be able to work (or to look for work), you may be able to claim up to 35% of your child care expenses. The limit on the expenses that can be claimed is $3,000 for one child/dependent or $6,000 for two or more. That results in $1,050 and $2,100 in actual credit respectively.

Line 50 – Education Credits

  • Lifetime Learning Credit: The credit is calculated as 20% of up to $10,000 of qualified expenses, so you can get back $2,000 per year.
  • American Opportunity Tax Credit. For parents currently paying college bills, the AOTC is a richer break than the Lifetime Learning Credit or the tuition deduction (and you can use only one). You can cut your tax bill by $2,500 if you spent $4,000 on tuition and fees. Only the first four years of undergraduate study qualify, and you must earn below $90,000 as a single filer or $180,000 if married and filing jointly.

Line 51 – Retirement Savings Contributions Credit

If you are single and have 2016 adjusted gross income of $30,750 or less, or you are married and have AGI of $61,500 or less, you can make out even better on a retirement contribution through the Saver’s Tax Credit. The credit is a potential bonanza for part-time workers who fall within the income limits. You can claim a tax credit worth 10% to 50% of the amount you put in, up to a maximum credit of $1,000 ($2,000 for joint filers). Contributions to a workplace plan, such as a 401(k) or 403(b), as well as contributions to a traditional, Roth or SEP IRA, are eligible for this credit.

Line 52 – Child Tax Credit

With a new baby also comes a $1,000 child tax credit to lower- and middle-income earners.  You get the full $1,000 credit no matter when during the year the child was born.

Line 53 – Residential Energy Credit

If you made earth-friendly home improvements — like buying energy-efficient windows or doors or installing more insulation — you could be eligible for a small tax credit, up to $500.00.

  • Windows, doors, and skylights: 10% of the cost up to $200 for windows and skylights; up to $500 for doors
  • Roofs: 10% of the cost up to $500
  • Central air conditioning: $300 credit
  • Gas, propane, or oil hot water boilers: $150 credit

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