It is possible that most people simply do not have the time or the patience to search the long list of overlooked tax deductions. However new tools have been developed that would drastically simplify the process of identifying the most suitable tax deduction instruments. In the United States for instance, the new 2006 Tax Deduction Maximizer searches for tax deductions and credits to determine if a tax-payer intending to invest in any of these schemes can claim them.
However there are many people who are not aware that there are over 350 tax deductions and credits the US Federal and State Governments that are certainly worth considering. For instance claiming more tax deductions is the key to paying less taxes and getting a larger tax refund. In this context some of the most effective US tax deductions are mentioned below:
The Bush Federal Energy Tax Credit
This is related to energy saving home improvements that allows a customer to qualify for the new energy tax credits. Such improvements can provide credit of up to US $ 500 to the US tax-payer.
Dependent Care Credit
Children or dependents need to be taken care of while the tax-payer is out at work and that means a certain amount of money would have to be spent for their care. This child and dependent care expense qualifies for substantial tax credits and may result in a decent tax refund.
A US $1000 Child Tax Credit
A tax-payer may qualify for tax credit of up to US $1,000 per child and the amount of child tax credit that could be claimed is adjusted to the tax-payer’s income.
Earned Income Credit
A married tax-payer earning less than US $ 37,263 ($35,263 for single or head of household) in 2006 may qualify for this tax credit, or even a refund check.
Tax advantages of a Mortgage
If a tax-payer has the ability to use the tax deduction of his mortgage interest payments he can save a substantial amount of money since the interest payment that he makes each month is often tax deductible. Renting a property also allows the tax-payer to save substantially on his tax payments as also an interest only mortgage, if the tax-payer qualifies for this kind of tax deduction. The tax-payer should check with his tax advisor on such matters.