Yahoo Finance 4 Ways To Find Tax Deductions That Work For You in 2024
Taxpayers can take advantage of numerous tax deductions, also known as tax write-offs, to lower their tax bill or receive a refund from the IRS come tax season.
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According to the IRS, deductions lower your income before you calculate the tax you owe. Most people take the standard deduction of $13,850 for single individuals or $27,700 for married couples filing jointly. The amount of the standard deduction changes to account for inflation and depends on your filing status, age, and whether you’re blind or claimed as a dependent by someone else. For some people, itemizing deductions if they exceed the standard deduction makes better sense.
The best way to find tax deductions is to understand what’s available to you. Here are ways to find out what expenses qualify as deductions.
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Understand Available Deductions
You can deduct certain expenses whether you take the standard deduction or itemize. To find out what tax deductions you can claim, you should understand what’s available to you. Below are some of the most common deductible expenses, but you can find a full list on the IRS’ website here.
Business use of car: If you’re self-employed and use a car for business, you may be able to deduct its entire cost of ownership and operation. If you use the car for business and personal use, the IRS says you’ll only be able to deduct the cost of its business use.
Home office expenses: Self-employed individuals who work from home can deduct expenses for the part of the home used for business. This includes a home office or daycare facility, a consultation room or a storage area either within the home or a separate structure.
Medical expenses: You can claim a deduction for medical and dental expenses greater than 7.5% of your adjusted gross income if you itemize your deductions.
Student loan interest: If you made payments on federal or private student loans, you can deduct up to $2,500 of the interest paid during the year.
Teacher expenses: Eligible educators can deduct up to $300 of any unreimbursed business expenses for classroom materials.
Contributions toward an IRA: If you put money into an IRA account, you may be able to deduct some or all of those contributions.
Health savings account: Taxpayers with an eligible high-deductible health insurance plan can make pre-tax contributions into a health savings account (HSA) and use the money to pay for medical expenses incurred before reaching the deductible.
Mortgage interest: You can deduct the mortgage interest you paid during the year on the first $750,000 of your mortgage debt for your primary or second home. It only applies to the first $375,000 if you’re married and filing separately.
Charitable donations: You can generally deduct charitable contributions if you itemize deductions.
Keep Detailed Records
Keeping organized records can help you identify potential deductions when you file your taxes. The IRS recommends having a detailed recordkeeping system to support deductions you claim on your return. This includes receipts, bills, mileage logs, proof of payments, invoices and other records. The IRS says you should keep these records for at least three years, but it’s a good idea to keep some documents longer, such as home purchase or sale records, stock transactions, IRA and business or rental property documents.
Use Tax Preparation Software or Hire a CPA
Tax preparation software like TurboTax can help determine whether itemizing or taking the standard deduction is best for you based on what you enter into the software. Another option is a professional tax professional who can advise and find tax deductions you might otherwise miss.
Use the IRS Interactive Tax Assistant
Have tax law questions? The IRS’ Interactive Tax Assistant (ITA) can help determine whether you can deduct expenses. You can ask the amount of your standard deduction or ask more specific questions, such as whether you can deduct your moving expenses or if your work-related education expenses are tax deductible.
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