The average tax refund was $2,994 in 2010.
Filling out tax forms can be time consuming, but it’s important to approach this critical task head on. If you procrastinate and rush through the process at the last minute, you may miss potential tax benefits you deserve. And the sooner you file, the sooner you can score a refund.
Leaving Money on the Table?
Weigh the benefit of itemizing your deductions, such as those for interest payments on a home mortgage, property or sales taxes and charitable donations, against the standard deduction.
Taxpayers who take the standard deduction can claim up to $500 more for property taxes ($1,000 for married couples filing jointly).
Two out of three taxpayers take the standard deduction, but seven in ten homeowners with a mortgage choose to itemize.
Standard Deduction for 2010
|Head of household||$8,400|
Don’t overlook potentially valuable deductions for these common situations:
- If you are supplying housing or financial support for a struggling relative, you may be eligible to claim them as dependent or qualify for a more favorable head-of-household status.
- You can deduct medical bills that exceed 7.5% of your adjusted gross income (AGI); only self-employed individuals who do not qualify for a workplace health plan can claim their insurance premiums.
- Certain college expenses up to $4,000 may count as a deduction if your income excludes you from the more generous education tax credits offered for 2010.
- Money spent looking for a job in your current field may also qualify if miscelllaneous deductions total more than 2% of your AGI. If the new position is more than 50 miles away, moving expenses can also be deducted – even if you don’t itemize.
- If you use a part of your home exclusively for business and can prove it is your principal office space, you may qualify to deduct a portion of your housing expenses.
Sources: Internal Revenue Service and The Wall Street Journal, November 12, 2010