Each year, more than 45 million taxpayers in the U.S. skip the standard deduction and choose to itemize instead, resulting in more than a trillion dollars in deductions, according to Kiplinger. Maximizing these deductions and taking advantage of tax credits are key to getting the biggest tax refund possible. See how many of these easily-overlooked deductions and credits you qualify for to learn how you can increase your tax refund.
Many mutual funds investors choose to automatically reinvest any dividends they earn, using this money to buy new shares. When you file your taxes, don't forget to deduct these reinvested dividends when calculating your capital gains tax.
The IRS allows you to deduct either state sales tax or state income tax from your federal return. If you live in a state with no income tax, you're qualified to deduct the value of sales tax on purchases you made throughout the year. Even if your state has its own income tax, it could make sense to deduct sales tax instead if you made numerous large purchases during the year.
If your medical expenses exceed 7.5 percent of your adjusted gross income, you can deduct them from your taxes. While this percentage seems high, you may be surprised to learn about the wide variety of treatments and expenses that qualify. The IRS allows you to include the cost of medical care for yourself, your spouse and your dependents. This includes medical bills, treatments and devices, as well as travel to and from appointments. If you pay your insurance premium out of pocket, this cost also qualifies, as does laser vision correction surgery or dental care.
While most people remember to deduct charitable donations, many forget to include out of pocket costs associated with these donations. You can deduct mileage, tolls and parking as you travel to volunteer jobs or donation sites. You can also deduct the cost of stamps or food used as part of a school fundraiser.
Student Loan Interest
It's easy to remember to deduct interest from your student loans if you pay them yourself, but easily overlooked if you aren't the one paying these loans. If your parents pay your students loans but the loans are in your name, you can deduct the interest they pay on your tax returns. Because the loan is in your name, your parents can't take this deduction, but you can deduct up to $2,500 of the total interest paid each year.
Child Tax Care Credit
The childcare credit allows you to reduce your tax bill dollar for dollar. For taxpayers with an adjusted gross income of $43,000 or higher, you may be able to deduct up to 20 percent of child care expenses. There is no upper earning limit on this credit, so even high earners may qualify.