Tax Breaks

Some tax breaks are available every year, and you can easily remember to file them every time tax season comes around. These tax breaks include tax credits for income earned, mortgage interest deductions, certain retirement plan deductions, charitable contribution deductions, and child care deductions. However, new tax breaks are introduced every year as well, and you need to find out what they are in order to maximize your tax deductions. Even if you decide to opt for the standard deduction this year, you should try to learn about other deductions that you may be eligible for in the future, and determine whether they are worth itemizing. Here are some of the more notable tax breaks for 2011.

Social Security Tax Deduction

The 2011 payroll tax cut will reduce the amount of social security taxes that you need to pay. If you are self-employed, you have to remember to include the deduction in the “employee” portion when you are filing your social security taxes.

Energy Efficiency Tax Credits

The 2011 energy efficiency tax breaks are not as generous as those offered in the previous year. However, there are new tax breaks that will give you substantial credits when you purchase new appliances, fixtures, and other things that can make your home more energy efficient, such as water heaters, biomass stoves, insulation, and windows. If you are planning to install a solar, wind, or geothermal system, you can get a tax deduction that is worth 30% of the total installation cost. Considering the high costs of installing such systems, this new tax break can help you save a large sum of money. For instance, if the total cost of installing a solar hot water system is $10,000, you can save $3,000 because of the deduction.

Commonly Overlooked Tax Breaks
When you are filing your tax returns, it is essential that you try to remember all the expenses that you have made in the previous year, and figure out which ones are tax-deductible. The most effective way to ensure that you do not miss any deduction is to use tax preparation software such as TurboTax. Here are some of the most commonly overlooked tax deductions:

Medical Expenses

Other than getting tax deductions for FSA or HAS contributions, you are also entitled to deductions for medical expenses that are not covered or reimbursed by your health insurance. Such deductions can be itemized if they amount to 7.5% or more of AGI.

Job Hunting Expenses

If you are seeking new employment in the same field, you are allowed to deduct the costs of career coaching, resume services, transportation for going to interviews, and others.

Moving Expenses

If your new job requires you to relocate to a place that is more than 50 miles away, you are eligible for deductions for moving expenses and other related travel expenses.

Taxes Paid Elsewhere

Tax Breaks

You can get deductions for taxes that you paid to other entities, such as property taxes and local or state income tax. If you are not required to pay state income tax, you can file a deduction for sales tax.