Tax deductions are a great way to reduce your taxable income and save money on your taxes. There are many deductions available, including the standard deduction, itemized deductions, non-commercial deductible taxes, personal property tax, real estate tax, sales tax, charitable contributions, gambling losses, miscellaneous expenses, and more. Property taxes may be deductible if itemized, but a limit comes into play until 2025. You can also deduct mortgage insurance premiums, mortgage interest, and real estate taxes you pay during the year on your home. Charitable contributions in cash totaling up to 60% of your adjusted gross income (AGI) are generally deductible.
Donations of items or property are also considered deductible charitable contributions. Medical and dental expenses qualify for a tax deduction if they exceed 7.5% of your AGI. The amount of your credit depends on your income and you should consult IRS Publication 170 to determine income requirements. If you're self-employed, you can deduct 100% of the health insurance premiums you pay monthly for yourself, your spouse, and your dependents.
When filing taxes with multiple deductions, start by gathering all the appropriate documentation such as Form 1098 for mortgage interest rate deductions. For other deductions based on expenses or contributions, keep accurate records. Don't forget to include reinvested dividends in your cost base when determining your profit as this can lead to overpaying taxes. TurboTax Premier and Home & Business tax preparation solutions include a very useful cost-base search tool that will determine your base for you and ensure that you get credit for every penny of dividends reinvested.
The Earned Income Tax Credit (EITC) is available to low-income people and can help reduce the amount of taxes owed. To qualify, you must meet certain requirements and file a tax return. Even if you don't owe any taxes or are not required to do so, you still need to file a return to be eligible. If the EITC lowers your taxes to less than zero, you may receive a refund.
A deduction is available for income received as a result of involuntary service during the period when members were deployed and mobilized to serve full time or during the period when their Indiana National Guard unit was formerly federalized. If you included “recovered” itemized deductions such as other income on your federal income tax return, that amount must be deducted on your Indiana income tax return. For those in an income tax-free state, there are two ways to apply for a sales tax deduction on your tax return. If you reimbursed some Social Security income during the year, you're not eligible for a reimbursement-based deduction (because Indiana didn't previously tax this income). If you give the money to your employer, you can deduct the amount to avoid paying taxes on money that simply passes through your hands. The standard deduction is an automatic deduction from your taxable income that you can receive without any details.
Contributions you make to a retirement plan such as a 401(k) or a traditional or Roth IRA give you a 50%, 20%, or 10% tax credit depending on the adjusted gross income reported on Form 1040. Tax deductions and credits can save a lot of money if you know what they are, how they work, and how to get them. The amount of money you can deduct from your taxes may not equal the total amount of your donations. By applying for the Child Tax Credit (CTC), you can reduce the amount of money you owe on your federal taxes.