It’s tax return time again, and we can help you get more back with this list of income tax deductions you may qualify.
Have your tax returns been less than impressive over the past few years? If you want to try and maximize your tax return and figure out the most common-tax-deductions, take a look at the tax deductions below.
Just be sure you check out all of the deductions I have detailed below, and you will be sure to stand a better chance of getting a little something back this year. If you already usually get a refund amount then this list will hopefully help you get even more.
Getting a courteous refund at tax time is better than owing. Some wild types might say, “You shouldn’t be excited about getting a refund that just means you overpaid this whole time!” ignore those types of cynical know-it-alls.
Federal Tax Deductions and Tax Returns Explained
Tax deductions are simple to understand if you keep it basic. Let’s use some first-round numbers, and for illustration, we will use $100,000 as our annual income. Let’s not get into tax brackets or any other issues as we will use this number since it makes explaining deductions very easy to follow.
A federal tax deduction radically reduces your taxable income. So if you were able to find somehow, qualify for, or “claim” $25,000 of federal income tax deductions, it would mean that you now have a “taxable” income of $75,000 rather than the $100,000 that you earned.
When you lower your tax liability, you stand a better chance of getting more money back. So even you will still actually earn far more, you will pay only on $75,000.
The Best Common Tax Deductions You May Benefit From
I have consistently gotten a refund on my taxes over the past twenty years. So, two of those twenty years where I had to pay a bit but all in all, I typically get money back. I will show you the strategies I use, and you may be able to apply some of these techniques, and you may be able to use the list of deductions to help you out on your income tax return.
This list of deductions as tax advice and I am not an accountant or a financial professional. This article is also not intended as legal advice, and I am not an attorney or another licensed professional.
I advise you to carefully check any potential impact using any of the following deductions may have on your tax return or tax situation.
You may want to seek the advice of a CPA, tax attorney, professional accountant, or other tax professional.
Since I have been doing my tax preparation since the age of 18, I have several decades of experience with my taxes.
I have learned quite a bit over that time and recently have done a little more research. So, put together a note of the most common tax deductions that can be useful to those who file taxes.
Even missing one deduction is money left on the table!
I’ve have prepared my personal and business tax deductions in every way you can imagine. I am starting with common old fashioned paper forms from the days before software existed to available free and affordable software such as TurboTax, Tax Act, and Quickbooks. Some of these apps and programs will even let you get started for free.
FitSmallBusiness.com also chose TurboTax as the best small business tax software for 2018.
Common Deduction #1
Put Money into an IRA account
Money that you earn and put into an IRA is tax-deductible. IRA is perhaps the most straightforward tax reduction you can arrange and claim. I did mention to carefully check your situation like this list has quite a few rules.
If you don’t have a tax professional doing your taxes, you may want to use software like TurboTax, which can be a real lifesaver for anyone trying to maximize their deductions.
Generally, contributions you make to any Traditional IRA can not make contributions to any retirement accounts.
You should be able to put up to $5,500 annually into a traditional IRA or up to $6,500 if you’re 50 years old or older.
You can start investing for retirement by using this simple technique. Remember that this is a one to one deduction opportunity. You can put $1,000 into your traditional IRA and can reduce your taxable income by $1,000.
Common Deduction #2
Deduct the interest from student loans
If you have student loans, you are likely accumulating plenty of interest every year. The big key is to calculate all the interest charged over the year. Depending on how your lender calculates the interest and applies for your payments, you could be paying thousands a year for interest alone.
Make sure you look very carefully at your statements and be sure to understand how the calculations are entire. You want to get ALL the numbers right since you don’t want to leave any money on the table when you could reach it as a deduction.
You are limited to $2,500 on this deduction, but that usually covers the interest for most people who have student loans
Again be sure to understand all the specific rules that apply with this one.
Common Deduction #3
Deduct interest on homeowner mortgage
Homeowners who itemize tax deductions can use this deduction, and it may be the most significant deduction you can claim each year. Interest on the mortgage loan can from the amount of taxable income. Your home can also help you lower your taxable income in many other ways like deductions on the amounts you pay on your homes property taxes.
Common Deduction #4
Deduct premiums paid for health insurance or deductibles and copays
This deduction is a bit rarer since you can only deduct any amount you pay for these items if those amounts you may exceed more than 10% of your AGI. Check out all the details and get more information on this deduction.
Common Deduction #5
HAS or FSA deductions
Health Savings Accounts are very common these days as are Flexible Savings Accounts. These types of accounts as supplements to your standard health insurance coverage, and they are also tax-deductible. If you are not taking advantage, you should be sure to start using it this year.
Still More Common Tax Deductions
Many of these deductions will also be available for small business owners, homeowners, couples and singles. Check out the next few deductions and be sure to take advantage of every tax break you can find.
Common Deduction #6
Deduct any contributions you make to charity
The deduction is a great way to help others and save lower your tax liability at the same time. You want to be sure to know and follow the rules. You can take advantage of lots of tax credits but be sure you document everything.
For this deduction, you should keep these things in mind. You need to donate cash or property, your contributions have to a qualified tax-exempt organization, and you have to keep records of all your donations. This link will steer you clear of any problems with this deduction.
Charitable Contributions You thought You Can Claim but You Can’t
Common Deduction #6
Deductions for small business owners
If you drive for companies like Lyft or Uber to make extra money, you can get some deductions for this as well.
You have “business” expenses for ride-share work that you do. So, that means you can get a tax deduction for the actual costs you incur operating your vehicle. You can be deducting the price of gas and oil, insurance and service repairs, and even lease payments.
Check out all the full details on this kind of deduction here, and you may find yourself with another crisp tax break while you’re at it.
If you are looking for extra money, take a look at the $300 Signup Bonus for New Lyft Drivers.
Looking for Additional Tax Deductions?
The following link: IRS’s complete list of available tax deductibles will help you understand the rules. So this will also show you tons of other deductions that I didn’t cover.
Doing your taxes can be a significant headache. So, if you have complicated tax issues, you may want to find an affordable charge professional.
If you’re going to manage your taxes yourself, you will find the job much smoother. Also, safer if you use the right tax software product like TurboTax.
Software like this was designed to help you achieve the most significant tax refund possible.
Important Legal Notice: This article is strictly intended as information only.
You should seek the professional services and consultation of a licensed tax.
Legal, financial, or accounting advisor before you make any transactions or choices.