For many, myself included, April 15 is both a blessing and a curse. For an entire year, we as Americans give a portion of our hard-earned wages to Uncle Sam, all with the promise that maybe he will throw some of those pennies back to us. And just like you, each year I find myself on my tax grind, hustling every possible tax deduction and rebate (all clearly stated within the legal tax code, of course).
Most taxpayers assume that those who get the most money back are homeowners, business owners, and non-profit organizations. While they can, and often do, receive significant checks from the IRS, renters usually count themselves out of the big "Refund Race." But lo and behold, renters are a strong competitor! Most of them just don't know it yet. There are a plethora of incredible tax tips to help renters get the most from their refunds, and I'd like to share some of my personal favorites.
Rent = Refund
Did you know that some states offer deductions for those who rent? It's true. Check to make sure you live in a participating state, but in some cases, renters can receive a tax credit of up to $600. Granted, this will only apply to state income taxes, not federal. Sometimes you're able to claim a small deduction if you own a small business or work out of your home, but it's complicated. If you're feeling iffy about whether you're eligible for the deduction, consult a tax professional.
Riding the bus all the way to the bank
Thanks to the American Recovery and Reinvestment Act, those folks in Washington have kept an eye out for all you city dwellers who don't drive. Each year, employees who use public transportation to travel to and from work are allowed to claim up to $230 a month to cover the cost of a bus, train, or car pool. That means that the cost of your monthly train or bus pass could literally be helping put money BACK into your pocket.
But what about the feds?
Okay, so there is one instance where you can deduct rent payments from federal income taxes. If your lease requires you to make property tax payments, you can deduct that portion of your rent or any property tax you pay directly. Also, if you have the misfortune of being the victim of a fire, flood, or even theft, as long as you aren't reimbursed by your insurance provider, those property losses are allowed to be deducted as well.
Jeff Golding is the President of WilliamPaid, a free, online rent payment service that allows users to build a credit history simply by paying their rent on time.