You may not normally think about taxes until April, but now’s the time to start gathering documents related to your 2014 tax-related transactions.
The following tax deductions and credits might be worth exploring to help you reduce your tax burden come April 15.
If you paid for things like tuition, fees and course materials in 2014, you could get a tax credit, according to ABC News.
The American Opportunity Tax Credit is calculated based on how much you claim annually for school expenses. The IRS says you can get 100 percent back on the first $2,000 you spend and 25 percent back for up to $2,000 more. That means this credit can be worth as much as $2,500, and even those who don’t owe taxes may be eligible to get up to $1,000 back.
If your holiday gift-giving included donating to charitable organizations, you may be able to deduct charitable contributions for 2014.
The IRS says clothing, money and household items can be donated and marked as a deduction on your taxes. Donation tax deductions from your household can come from items such as electronics, appliances, linens and furniture.
If you are claiming more than $250 in donations (either products or money), the IRS requires a description of the items and written acknowledgment from the charitable organization to submit with your tax returns.
When you give any amount of monetary contributions to a charity, the IRS asks for written communication from the organization or a bank record, such as bank statements, credit card statements or pay stubs (if the donation was given through a payroll deduction).
Being environmentally conscious is not only good for Earth, but it may also bring you a decent tax break. According to the U.S. Department of Energy, you can receive a credit if you made certain green home improvements in 2014.
If you installed energy-saving systems — such as solar-powered electric and water heating, fuel cells, small wind-energy equipment, or geothermal heat pumps — before the end of 2014, you could qualify for the Residential Renewable Energy Tax Credit.
This rebate allows taxpayers using these green systems to claim as much as 30 percent of what they spent to have them installed. In order to be eligible for this tax credit, the installation for your equipment must have been completed before the end of the year.
This tax season, you might be able to lower what you owe by taking advantage of these 2014 tax deductions and credits. Whatever you decide is your best tax strategy, the IRS recommends making sure you keep good records and documentation of all of your transactions throughout the year.
Please note that Allstate Life Insurance Company or its agents and representatives cannot give legal or tax advice. The brief discussion of taxes on this page may not be complete or current. The laws and regulations are complex and subject to change. For complete details consult your attorney or tax advisor.