I just read that as of Feb. 14th, people who itemize deductions on their tax returns are able to file them for 2010. I lost my job this year so I want to be really careful to make sure I don’t pay more taxes than I have to. Do you have any tips? MICHELLE, Chicago, IL
This is a great question that applies to a lot of people. In fact, 46 million people use itemized deductions, and they claim about $1 trillion. Roughly double use standard deductions, and they claim another $700 billion. With over 70,000 pages in the tax-code, it’s easy to get lost! However, it is important to pay attention because you can save a lot of money if you take the deductions you are entitled to.
Let’s start with the fact that Michelle said she lost her job this year. Michelle is certainly not alone. In fact, roughly 10 pwrcent of Americans were out of work in 2010. What most people don’t know is that you can deduct your job-hunting expenses, assuming your total miscellaneous itemized deductions are greater than 2 percent of your adjusted gross income. These expenses include everything from the cost of printing resumes to the cost of getting to and from interviews. The catch is that you must be looking for a job in the same field, and it cannot be your first job.
What about the people who were looking for their first job? Are they out of luck?
No, they aren’t. While they can’t get the deduction I just mentioned, there is another deduction that they shouldn’t miss. If you graduated in 2010 and moved somewhere to start your first job, you can get a deduction for that. If you moved at least 50 miles for your job, you can deduct your moving expenses. Moving expenses include many of the costs you paid out of pocket to move your household. For example, you can deduct the cost of renting a moving truck, highway tolls or parking costs you paid during the drive, and even 16.5 cents for every mile you drove. This is not a bad savings when you’re just starting out. Just don’t try and claim any speeding tickets!
So, there are deductions for people looking for jobs and deductions for people moving for jobs. What about people who are in school? Is there a tax deduction for that?
Yes, there is. However, it is a tax credit instead of a tax deduction. Let me first explain the difference between a deduction and a credit.
A tax credit actually reduces the amount of taxes you owe the government, dollar for dollar. A tax deduction decreases your taxable income. So, with a $1,000 credit, you will actually pay $1,000 less in taxes. However, with a deduction, if you pay 25 percent in taxes, a $1,000 deduction would shave $250 off your tax bill. It is also important to remember you can claim a tax credit even if you don’t itemize your deductions.
So, now that I’ve explained the difference between a tax deduction and a tax credit, it should make more sense when I say if you were a student in 2010, you should NOT miss this credit. It is called the American Opportunity Credit, and it allows up to $2,500 of college tuition and related expenses to be taken as a tax credit. You can claim this credit for all four years of school. Take advantage of this credit while you still can because it is set to expire in 2012.
Are there any other credits people often overlook that you want to mention?
I’m glad you
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This Week’s Celebrity Instagrams (11/26-12/2)
30 photos Launch gallery
1. Little Legend and Puddy 😍😍😍😍
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2. "You on point Phife?" "all the time,Tip". 💥 #bannedfromnormal
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3. Vegan! The Impossible burger at Crossroads
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4. Lawrence #BeforeandAfterEpisodes 1-4: 184lbs 13% body fatEpisode 8: 196lbs 8% body fat S/O @coachdaveboxing with the works outs and @kildareriordan with the nutrition
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5. Jus haaaanngin out
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6. Meanwhile back at home in Atlanta GA someone mad they not on the 🛳. 😳
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7. No limits... Photo cred: Chris Bridges @ludacris
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8. new new
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9. Apparently my 260lbs is too much for the actual vines in the Hawaiian jungles to hold me without breaking and me falling hundreds of feet. So for safety purposes, I'm forced to swing thru #Jumanjj on wires strong enough to hold 12 adult buffaloes and 1 adult Rock. #OnSet #Jumanji #IronicallyIEatBuffaloDailyForLunch #MoreManThanNatureKnowsWhatToDoWith
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10. hey ma! 🎎#wcw 💙
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11. Surprise visit to our factories!!! #GoodAmerican #USA
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13. Peachy Keen 🔥✨⚡️
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14. If this don't look thankful I don't know what does. Happy Thanksgiving to you and yours. #UltraBlessed #24kMagic #SweetPotatoFly
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15. Late nights @nbcmarlon with the writers... we in here!!!
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16. There goes my baaaaaaaaabbbbyyyyy #QueenKingMagic!!! We're up to something! Ira BIG!!! Stay out our buisness -
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17. You want to win every game you play but when you come home to these faces... who cares. #ILoveYouGirls best part of my day, everyday!
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18. Steady,steady..... full size jenga.. "I got this one "???? Or do I ?
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19. Cornrows kind of day 😉@dontaysavoy2 you convinced me and I love. ❤️️
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20. #BrotherlyLove #tbt
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22. #basel #TeamLOVE @kingcombs
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23. Just introduced a special screening of @directher 's groundbreaking (must see) documentary @13thfilm with my brother @themichaelealy | @unitedblackout #blackoutblackfriday
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24. Me & Vanessa Williams giving #DuckLips #Pose on the set of #DaytimeDivas @vh1 - Coming Soon to a tv near you. Lol. - My make up done by @makeupsurgeon
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25. This picture just makes me wanna praise the Lord, you hear me!!!!!! Yes Lord brotha #TEDDYCAMPBELL What a #man !!! You are everything right on this picture husband ......... #gorgeous #stylish #classy #strong #masculine #king #sexy #debonair #gentlemenstyle And that #bible in your hand just seals the deal for me (probably cause i know that, that is what helped you become just as amazing as you look😘). While my heart and mind experiences the goodness of God at #church on Sundays, my eyes experiences the goodness of Teddy😍. Amen somebody🙌🏽. "Bless the Lord oh my soul and all that is within me bless his holy name" #myman #myhusband #goodman #blackman #dapperman #godlyman #goodfather #mybestfriend
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26. Yesterday was my mama's 53rd birthday!!!!! Got to celebrate with her all day. If this is what I have to look forward to I can't wait. Looking like a soft bucket a cocoa butter. Yaaaaaaaaaas! 😍😍😍 love you mommy!
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27. "Shout out to @PureAtlanta for getting the family right"....I'm loving this jogger. 😍😍
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28. This pic warms my heart ❤️ #myLogiebeans and aunt aunt umba @itowandabraxton 😘
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29. You will always be my baby😜. #HappyBirthdayReginae #mybaby18
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30. GC "Gods Child" Red on Red SweatSuit available now at www.MonicaApparel.com ... Take Your Crown wherever you go!! I'm pictured in a Medium... Go to the site now for other options ... cc: @trukernell
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