Overlooked Tax Breaks

Don�t miss out on tax credits you might be eligible for.

National Association of Black Accountants and managing partner of James D. Brown, CPA, in Teaneck, New Jersey. “But say the church had a bake sale and you contributed goods to that. The money that you spent purchasing ingredients to fry that chicken or bake that cake is a charitable contribution.”

Cost of COBRA premiums. Medical costs are typically deductible once they reach more than 7.5 percent of a taxpayer’s AGI. However, if you were out of work last year and ended up footing the bill for your health insurance through the Consolidated Omnibus Budget Reconciliation Act (COBRA), you may have easily reached that threshold, making those Cobra premiums tax deductible, says Wilma Hayes, a financial advisor for H&R Block.

Education benefits.
Tax breaks such as the Hope Credit, which is designed to help those paying for college, are often overlooked, Hayes says. The American Opportunity Tax Credit is worth up to $2,500 per student and can be applied for the first four years of post-secondary education. Student loan interest is another break many taxpayers miss, says Brown. Some parents may not be able to benefit from the deduction on student loan interest, since your modified AGI must be below $70,000 if you’re filing as a single person or $145,000 if you’re filing jointly. But the IRS allows you to treat that money as if it were a gift to the child “so the parent could pass that deduction on to the child,” says Brown.

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