There are many tax deductions and credits that taxpayers should be aware of, but what if you can’t reap the full benefits of a deduction in the given filing year? Some deductions and credits may be eligible to roll over into future years. These tax carryovers could save you money on your tax return.
Some deductions or credits may not be fully used in one tax year and are eligible to be carried over into future years, including:
• When you have a net operating loss
• When your total expense for a permitted deduction exceeds the amount you’re allowed to deduct in a given year
• When a credit you qualify for exceeds the amount of tax you owe in a year
• Adoption tax credits
• Foreign tax credits
• Credits for energy efficiency
Track these (or have your software do it), so you don’t forget them from one year to the next.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from Credit Karma