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Tax Breaks If Your Personal Economy Is Weak

5 surefire ways to reduce your 2014 tax bill 

(This article appeared previously on MarketWatch.com.) 

You’ve probably seen those commercials about planning for your personal economy, as opposed to the general economy. The concept makes sense. For example, many folks have not yet received any noticeable uptick from the slowly (very slowly in some places) improving general economy.

I know that in my own area, the overall jobs situation is still pitiful compared to 10 years ago.

(MORE: 11 Money Moves to Make By Year-End)

So let’s revisit some tax-saving opportunities that are especially relevant if your personal economy is still pretty bleak:
1. Breaks for Going Back to School
Improving your resumé by going back to school could help you improve your job situation. Meanwhile, you can probably collect some tax breaks to help offset the expenses. The most valuable breaks are employer-paid education arrangements, the American Opportunity tax credit (worth up to $2,500 for each eligible student) and the Lifetime Learning tax credit (worth up to $2,000 per household). Other less-lucrative breaks can be helpful too. For details, see my three earlier stories here:
2. Breaks for Helping Struggling Relatives
If you’ve been helping out a relative by providing a place to live, paying medical bills, and so forth, you may be entitled to some extra tax-saving write-offs on your Form 1040. These breaks are often overlooked because many folks never needed to help out relatives the way they do now. Take a look at the following two earlier articles to see if your good deeds make you eligible for a personal exemption deduction ($3,950 for 2014), favorable head of household filing status (which gives unmarried individuals lower tax rates and a bigger standard deduction) or a medical expense deduction:
3. Job-Search Expenses to Deduct
You may be able to claim a tax-saving write-off for expenses incurred when looking for a job. You must be an itemizer to benefit, and no write-off is allowed if you’re trying to switch occupations. If you have qualifying expenses, add them up and treat the total as a miscellaneous itemized deduction item on Schedule A of your Form 1040. For details, see my earlier article on deducting job-search expenses.
4. Rental Property Losses to Deduct
You may own a rental property that’s losing money due to lower rents and higher vacancy, or you may have sold a property for a loss. The good news is you may be eligible for tax savings that will help ease the pain. The rules for deducting investment real estate losses can be tricky, but I explained them in two earlier articles:
5. Property Tax Assessment Appeals
Some property owners are getting hit with property taxes on inflated assessed values that are not close to the current truth, even though prices have recovered in many areas. Fortunately, it’s often relatively easy to appeal an assessment, and doing so could save you hundreds, or maybe even thousands, of dollars each year. If you own a vacation home or rental property, the potential savings are that much greater.

When I appealed the valuation of my home, I was able to shave $1,400 off the annual property tax bill, and the process only took a couple of hours. Based on my experience, which was quick and easy, you don’t necessarily need to hire someone to put together an appeal. However, strict filing deadlines usually apply to appeals, so pay close attention to your next property tax assessment notice (it will probably state the deadline). For more on the subject, see this article.

The Last Word
If you qualify for any of the federal income tax breaks mentioned here, you can claim them when you file your 2014 Form 1040. If you discover that you overlooked one or more breaks on your 2013 return, you can request a tax refund by filing an amended 2013 return using Form 1040X. As for your possibly overstated property tax bill, you’ll have to wait for the next notice to do anything if the appeals deadline is history. Put it on your to-do list.

Bill Bischoff covers tax and retirement issues for MarketWatch.com.

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