IRS tax deductions reduce a taxpayer’s taxable income, which lowers their tax liability. A deduction subtracts from your gross income to reach your Adjusted Gross Income (AGI) or taxable income. This effectively reduces the amount of income the government can tax.
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Nov 18, 2020You can deduct up to $10,000 ($5,000 if married filing separately) in state and local taxes when you itemize your deductions. You can report taxes for general sales, real estate, personal property and foreign taxes. However, you can’t deduct both general sales tax and income taxes. When deducting general sales tax, you can use your […]
adminNov 16, 2020The qualified business income deduction (QBI) is a tax deduction that allows small businesses to deduct up to 20% of their business income on their tax return. Taxpayers can begin to claim this deduction on their 2018 taxes onward. However, the income must be qualified business income. Eligibility A business operated as a sole proprietorship, […]
adminNov 16, 2020A net operating loss (NOL) is when your deductions exceed your taxable income. It can reduce your taxable income in future years as well as your income tax. Due to the Tax Cuts and Jobs Act (TCJA), the NOL has undergone some changes. In order to have an NOL, your loss must be caused by […]
adminNov 16, 2020You can deduct your home mortgage interest on the first $750,000 of indebtedness. If you’re married filing separately it’s the first $375,000. However, if you are deducting mortgage interest from indebtedness before December 16, 2017, there are higher limitations. It stands at $1 million and $500,000 if married filing separately. For the tax years prior […]
adminNov 16, 2020If you are itemizing your deductions (using Schedule A), you can report your medical and dental expenses. The amount of your total medical expenses must exceed 7.5% of your adjusted gross income. The IRS states that all medical care expenses include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for […]
adminNov 16, 2020You can only claim your charitable donations if you are itemizing your deductions. However, your organization must qualify for a tax deduction. To find out if it qualifies, use the IRS tool by clicking here. That being said, you must keep a record of cash, check or other monetary gift contributions. For example, you will […]
adminNov 16, 2020There are two deductions that you can take when filing your tax return. You can either take the standard deduction which is based on your filing status and set annually due to inflation, or itemize your deductions by reporting your expenses (located on Schedule A). The standard option reduces your income before income tax. The […]
adminNov 16, 2020If you pay interest on a qualifying student loan, you can take the student loan interest deduction. This deduction is an adjustment to your income, so you do not need to itemize your deductions (as long as it doesn’t reach the annual limit of your filing status). You can claim the deduction if: You paid […]
adminNov 16, 2020In order to deduct your teaching expenses, you must be an eligible K-12 educator. You must also teach at least 900 hours in a school year. Here are some examples of professions that count: Principal Counselor Instructor Teacher Teacher’s Aide When filing your tax return, you can deduct up to $250. If you’re married filing […]
adminNov 16, 2020If you are enrolled in a high deductible health plan, you have a health savings account (HSA). Prior to HSAs, people who are self-employed could contribute to a medical savings account (MSA) if they had a high deductible health plan. This is located on Form 1099-SA. If you or your employer contributed to a Health […]
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