Here’s how to find great tax breaks you might have missed

Here's how to find great tax breaks you might have missed(Photo: GETTY IMAGES)We all want to lower our taxes, and while the IRS is not in the habit of giving out money for free, it does offer a number of tax breaks for filers of different circumstances. Thankfully, maximizing those tax breaks is often a simple matter of doing your research and knowing what to look for.There are a number of deductions available to tax filers that, especially when combined, can amount to some pretty significant savings. Deductions work by excluding a portion of your income from taxes. A $1,000 deduction, for instance, means you won’t pay taxes on $1,000 of earnings. If your effective tax rate is 25%, that will translate into $250 in tax savings.With that in mind, here are some deductions you may be eligible for:In addition to tax deductions, there are a number of credits available that can shave thousands off your tax bill. Unlike deductions, which simply exclude part of your earnings from taxes, tax credits serve as a dollar-for-dollar reduction of your tax liability. So while a $1,000 deduction will only save you $250 if you typically fall into the 25% tax bracket, a $1,000 credit will shave a full $1,000 off your tax bill.Tax news and adviceAs is the case with certain tax deductions, most of these credits aren’t available to high earners. But if you’re a low or middle-income household, it pays to see whether you qualify.Here are some of the lucrative tax credits available:Though most of these credits are non-refundable — meaning the most they can do is reduce your tax liability to $0 — the Earned Income Tax Credit is refundable. If you owe no tax but then apply the credit, you’ll get a refund check for the difference.While reading up on credits and deductions can help you cover your bases, you’re even less likely to miss out on a crucial tax break if you file your return electronically. Most of the tax software out there is designed to ask the right questions and help you arrive at the deductions and credits you’re eligible for. Best of all, if you earn less than $64,000, you can file at no cost using the IRS Free File tool.When you sit down to file your return this year, take the time to explore the numerous tax breaks out there. You may be surprised at how much you’ll save.The Motley Fool has a disclosure policy.The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.Offer from the Motley Fool: The $16,122 Social Security bonus most retirees completely overlook
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