With tax season almost over, you want to make sure you make the most of your deductions on your federal tax return, especially with the changes coming with the new tax law! Here are just a few deductions that you may not know about:
Sales Tax and State Income Taxes
You have the option to deduct sales and state income taxes off your federal income tax. The sales tax deduction is most effective if you recently made a big purchase like a car or an engagement ring. If you decide to use this option, you will have to itemize your deductions instead of taking the standard deduction.
Health Insurance Premiums
Medical expenses, especially premiums, can really hurt your wallet and so the IRS tries to give you a tax break for it. You can deduct medical expenses if they exceed 7.5% of your adjusted gross income. Your adjusted gross income is your income minus all the personal exemptions and deductions. In certain cases, if you are self-employed and have to handle your own health insurance coverage, you can potentially deduct up to 100% of the premium cost.
Teacher Tax Savings
Most teachers have to use their own money to help pay for items for their classrooms and that can really break the bank sometimes. To help, the IRS allows teachers educating kids K-12 to deduct up to $250 for materials bought for their classroom. This deduction is subtracted from your income, so you can take advantage of the deduction without having to itemize!
Charitable Gifts
Many taxpayers are aware that they can deduct money or goods that are given to a charity, but they can also receive a deduction for out-of-pocket expenses for charity work as well. It helps to save your receipts to show proof. You can also deduct the cost of a babysitter if you can provide documentation that you were volunteering at the time you hired the babysitter.
Lifetime Learning
College students have a number of deductions they can claim including the Lifetime Learning credit. The Lifetime Learning credit can provide up to $2,000 per year, taking off 20 percent of the first $10,000 you spend for education after high school in an effort to increase your education.
Looking For Work
Losing your job can be rough, and trying to make ends meet without any income can be very hard. If you’re looking for a job in the same field, you can itemize your deductions and if those expenses exceed 2% of your adjusted gross income, you can deduct any qualifying expense over that threshold. This can include the cost of printing resumes or the miles you drive for interviews.
Self-Employed Social Security
The bad news about being self-employed is that you must pay 15.3% of your income for social security and Medicare taxes, which are usually paid by both the employee and employer. But as a small consolation, you can deduct the 7.65% employer portion off your income taxes.
If you or your business needs help filing your taxes or have questions about tax deductions, Polston Tax can help. Call 844-841-9857 or click below to set up a free consultation!
