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7 Tax Breaks Everyone Should Know

Debt Consolidation

If you’re considering debt consolidation, chances are you’re looking to pinch every penny and save however possible. One of the most overlooked ways to save your money is through yearly tax breaks and deductions. Many people are unaware that there are hundreds, if not thousands, of different tax breaks available to them. However, it’s up to you to take advantage of them. It may mean taking a little longer on your taxes this year, but the savings should be well worth it. Here’s a look at 7 of the top tax breaks that everyone should be aware of:

  • New Home Buyers - One of the biggest tax credits in recent news is for first time home buyers. In order to encourage people to buy homes and turn the declining market around, most first time buyers are eligible for a tax break as large as $8,000 in 2009. Your adjusted gross income may affect the size of your tax credit.
  • Tuition - A big advantage of getting an education are the great tax claims that come with it. Many people can deduct up to $4,000 for qualified education expenses, as long as their income is below $65,000. You can still deduct up to $2,000 if your income is under $80,000.
  • Property Taxes - For most people, property and real estate taxes are fully deductible. However, you can’t double dip if you already receive a property tax refund from your city or state government.
  • Dependents - Most people know that they can claim their children on taxes, but not everyone is aware that they can do so even after the child is over 18 years old. As long as you still pay over half of their expenses, they live at home for over half of the year, and they attend school, you can claim children until the age of 24.
  • Teachers - As any teacher could tell you, going out of pocket to pay for classroom supplies or learning tools is often a necessity. Luckily, teachers and other educational professionals may be eligible to deduct part of those expenses, even if they don’t itemize.
  • Save Money by Saving - Did you know you may be able to use tax credits just for saving and investing? If you have an income lower than $25,000 a year, you may get a credit for contributions you’ve made to your retirement plans, such as your 401(k) or Roth IRA’s. The size of your credit depends on your income and the amount of money you invested.
  • Going Green - Maintaining an energy efficient lifestyle definitely has its advantages today. By using solar power, installing fuel cell systems, or making other energy efficient upgrades in your home, you may be able to use up to $2,000 in tax credits. Purchasing an electric or hybrid vehicle could also earn you some federal tax breaks, depending on the car and the state you live in.
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