1. The rules haven't changed, but there is a new simplified method for 2013 returns for figuring out a home office deduction. Mark Steber, chief tax officer at Jackson Hewitt, said many taxpayers who own a small business or work from home may qualify for a home office deduction, but don't take it because of the complexity. The new method might help. The office area must be used on a regular basis for business and be either for the convenience of the employer, or used by a self-employed person to meet clients. The space must be used exclusively for the business; it can't be used to store seasonal decorations, as a guest room or entertainment room.
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2. Do you have college-age children? Or did you head back to college yourself? The American Opportunity Credit is worth up to $2,500 per eligible college student. The Lifetime Learning Credit can apply for college students, graduate school and professional degrees. Income limits and other rules apply. Get Form 1098-T to show the student attended an eligible institution.
3. Don't overlook a 0% rate on long-term capital gains. Yes, it's a limited tax break that applies in 2013 for married couples with a taxable income of $72,500 or less; the limit is $36,250 for single filers. If you hold onto stock for longer than 12 months, you can benefit from a reduced tax rate on long-term capital gains. But remember, your taxable income is going to include capital gains.
4. Casualty losses are generally deductible in the year the casualty occurred. But not always. Barbara Weltman, author of "J.K. Lasser's 1,001 Deductions and Tax Breaks 2014," noted there are some cases where you can take the disaster loss in the preceding tax year, if you have a casualty loss from a federally declared disaster that occurred in an area warranting ! public or individual assistance. For example, Colorado flood victims have until Oct. 15, 2014, to decide when to claim disaster losses arising from last September's flooding.
5. Cash any U.S. savings bonds in 2013? Typically, interest is taxable on federal returns, but not on the state income tax return. Some very complex rules give you a shot at being able to exclude income on federal taxes, if the savings bonds were cashed in the same year that the money was used for college tuition. The college-education related tax break would apply to a Series EE bond issued in 1990 or after or a Series I Bond if your modified adjusted gross income is less than $142,050 if married filing jointly. Another twist: The bond owner listed on the bond must be at least 24 years old before the bond's issue date. If you claim the exclusion, the IRS warns that it will check it against bond redemption information from the Department of Treasury. You'd have to pay qualified education expenses for yourself, your spouse, or a dependent for whom you claim an exemption on your return. So, no grandparents cannot use the tax break unless the grandchild is their dependent.
6. Alternative Motor Vehicle credits can be confusing. IRS publications note upfront that the Plug-In Electric Vehicle Credit has expired. But these credits have different names and rules. And the Plug-In Electric Drive Motor Vehicle Credit still applies to cars like the Chevy Volt and has not expired. We're looking at a potential $7,500 federal tax credit. The Plug-In Electric Drive Motor Vehicle Credit begins to phase out once 200,000 of the vehicles per manufacturer have been sold for use in the U.S., said Mark Luscombe, principal analyst for CCH Tax & Accounting North America.
7. Do you have an adjusted gross income of $58,000 or less? The Free File program offered via the Internal Revenue Service website connects tax filers to free software to prepare and file taxes online. See www.irs.gov.
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8. Did your child attend day camp last summer? What does that have to do with taxes? If you're working, the cost of day camp can count as an expense toward the Child and Dependent Care Credit. The expenses must be needed so you and your spouse, if filing jointly, could work or look for work. The child must be younger than 13 when the care was provided. The credit could be 20%-35% up to $3,000 in work-related expenses for one child; or $6,000 for two or more. On the 2013 return, your adjusted gross income can be more than $43,000 but at that income the percentage used to calculate the credit is 20%.
9. It's OK, really, to hang up on the IRS. Ignore fraudsters who are claiming to be from the IRS and demanding money or promising refund money.
10. low down. Did you review all the Social Security numbers on your return? Double check the math. Mistakes can delay refunds.
11. Running late? See Form 4868 for an automatic six-month extension until Oct. 15. If you qualify, this form does not give you more time to pay taxes. If you do not pay the amount due by the regular due date, the IRS notes, you will owe interest and possibly penalties.
12. Did you pay for private mortgage insurance? The PMI premiums could be deductible if your adjusted gross income didn't exceed $109,000 in 2013 and you took out that mortgage in 2007 or after.
Contact Susan Tompor at stompor@freepress.com. Follow her on Twitter @Tompor
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