Hi, I’m Bette Hochberger, CPA, CGMA. For today’s Tax Tip Tuesday, I am going to give a comprehensive guide on maximizing deductions.
Tax deductions are the secret potions that can work wonders in reducing your tax burden. In this comprehensive guide, we’ll explore common and lesser-known deductions, unraveling their requirements so that you can keep more of your hard-earned money. Let’s dive in and discover the treasure trove of deductions available to you!
Common Deductions
Home Mortgage Interest: Homeowners, rejoice! Deducting mortgage interest on your primary and second homes can lead to substantial tax savings. Ensure your mortgage meets the IRS criteria and falls within the limits.
State and Local Taxes: You can deduct state income tax or sales tax and local property taxes if you itemize deductions. However, the Tax Cuts and Jobs Act (TCJA) has imposed a cap on the total deduction amount.
Charitable Contributions: When you donate to qualified charities, you can claim deductions for the contributions, but remember to keep proper documentation.
Medical Expenses: You may deduct qualified medical expenses that exceed a certain percentage of your adjusted gross income (AGI). Keep records of medical bills and expenses to support your claim.
Student Loan Interest: For eligible taxpayers, deducting student loan interest can provide much-needed relief. Review the income limits and other requirements to ensure eligibility.
Lesser-Known
Educator Expenses: Teachers can deduct out-of-pocket expenses for classroom supplies, books, and educational materials up to a certain limit.
Moving Expenses: If you moved due to a change in your job location, you might be able to deduct moving expenses, subject to specific requirements.
Home Office Deduction: Self-employed individuals and certain employees working from home might be eligible for a home office deduction based on square footage and exclusive use criteria.
Energy-Efficient Home Improvements: Making qualified energy-efficient improvements to your home can earn you deductions and credits, saving both energy and money.
Job Search Expenses: If you were on the hunt for a new job in the same profession, certain job search expenses might be deductible.
Health Savings Account (HSA) Contributions: Contributions to an HSA are tax-deductible and can be used to cover medical expenses tax-free.
So, remember to keep detailed records, receipts, and the necessary documentation to support your deductions during tax filing. If you’re uncertain about any deduction’s eligibility, seek the guidance of a qualified CPA to ensure compliance with tax laws.
I hope you learned something new today. As always, stay safe, and I will see you next time!
