15 Top Tax-Saving Ideas For Your 2015 Tax Return

Although your 2015 federal income tax return is due on April 18 (April 19 in Massachusetts and Maine), there's still time to reduce your tax bill. Here are 15 top ideas:

  1.  Contribute to an IRA. If you don't have an employer-sponsored retirement plan and your income is below an annual threshold, contributions of up to $5,500 ($6,600 if you're age 50 or over) are at least partly tax-deductible. Your tax return due date is the deadline for depositing the money.
  2.  Fund a SEP. If you're self-employed you can deduct contributions up to 25% of your compensation or $53,000—whichever is less—to a Simplified Employee Pension (SEP) on your 2015 return. For these contributions the deadline for 2015 returns is the due date for extensions—October 17, 2016.
  3. Carry over a capital loss. If you lost money when you sold a stock or another security, you can use that loss to offset capital gains plus up to $3,000 of highly taxed ordinary income. And you can carry over any additional losses to the next year. So if you have a loss remaining from your 2014 return, it can reduce your 2015 taxes.
  4. Get a passing tax grade. Parents may qualify for a higher education credit or a tuition deduction, although your ability to take advantage of these is phased out if you exceed specified income limits. The tuition deduction was restored for 2015 by the Protecting Americans from Tax Hikes (PATH) Act.
  5. Choose a state tax deduction. Depending on your needs, you may deduct state and local income taxes or opt to deduct state and local sales taxes that you paid in 2015. The optional sales tax deduction also was reinstated by the PATH Act.
  6. Avoid mutual fund tax traps. The law requires you to pay tax annually on capital gains and dividends from mutual funds. But when you sell your shares you can add that income to the "basis," thus reducing your capital gains on the sale.
  7. Work out a charitable deduction. Although you can't write off the value of the personal services you provide to a charity, you can deduct expenses you pay out of your own pocket. For example, if you host a dinner or travel on behalf of a charity, those costs may be tax-deductible.
  8. Secure an extra exemption. Generally, you may claim a dependent's exemption for a parent or another elderly relative if you provide more than half of the support for that person and the relative's taxable income doesn't exceed $4,000. Check your records to see whether you're eligible.
  9. Boost your medical deduction. You may deduct unreimbursed medical expenses that exceed 10% of your adjusted gross income (or 7.5% of AGI if you're age 65 or over). Don't forget to count medical expenses for relatives for whom you provide more than 50% of their support (whether or not you qualify for a dependent's exemption for that person).
  10. Write off health insurance costs. If you're self–employed, you can claim a deduction for health insurance premiums you paid in 2015 for yourself, your spouse, and your kids. (This deduction isn't subject to the 10%-of-AGI limit for medical expenses.)
  11. Add some foreign intrigue. Are you diversifying by investing internationally? The tax law may give you the opportunity to offset taxes charged by foreign countries.
  12. Boost your investment interest deduction. Investment interest—that you might pay on a margin loan, for instance—is tax-deductible only up to the amount of your net investment income, excluding capital gains. But if you forego the preferential tax rate on a particular capital gain, it will count as investment income and increase your deduction.
  13. Collect interest deduction for students. Interest you pay on personal loans or credit cards isn't tax-deductible, but you still can claim a deduction for student loan interest, up to a maximum of $2,500. Here, too, however, the deduction is phased out if your income is too high.
  14. Lock in deduction for points. If you paid "points" to obtain a favorable mortgage interest rate for a home you bought in 2015, you can deduct the full cost of those points on your return. However, you'll have to deduct points paid to refinance a mortgage over the term of the loan.
  15. Pump up an energy credit. Finally, the tax law allows you to claim a 10% credit for energy-saving devices or materials installed in your home, up to a lifetime maximum of $500. The maximum credit is reduced by residential energy credits you've claimed in prior years.