Did you spend a ton of money on medical expenses last year? If so, you may qualify for the medical expense tax deduction. This means you must spend more than 10% of your AGI on medical expenses (7.5% if you are older than 65) to qualify. Therefore, go look at your finances now and see if you qualify.
Medical Expenses You Can and Cannot Deduct
You can deduct medical expenses for your spouse, dependents, and your own expenses that qualify.
You are not able to deduct reimbursed medical expenses.… Read the rest
Are you looking to renovate your home? Usually, you can’t expect to deduct anything from your Federal tax return just because you decided to make changes to your home.
But certain home-improvements are tax deductible and can be utilized to reduce the amount of tax you pay to Uncle Sam.
There are both tax credits and deductions that can be taken when the purchase was made or afterwards. Let’s look at them.
Use Your Mortgage to Improve Your Home
If you’re buying a home, then you can reduce the costs of your renovation project by making the changes when you purchase the home.… Read the rest
As a married couple, you can get around some profit from being taxed. It won’t be for the full amount that typical joint filers file of $500,000, which is based on one spouse’s eligibility for capital gains home sale exclusion.
The profit or gain of the home sale will determine whether you owe or not. You can even sell your home for millions and not owe a dime to the IRS if your profit wasn’t more than the allowable amount. If all the gain is avoidable, you will not owe.… Read the rest
Even if you have the best insurance plan, you still might end up paying medical bills. However, all hope is not lost. You can still get a tax break from your medical expenses that can help reduce your overall medical costs.
In 2018, the IRS allowed you to deduct medical expenses that exceeded 7.5% of your adjusted gross income.
Beginning Jan. 1, 2019, all taxpayers may deduct only the amount of the total unreimbursed allowable medical care expenses for the year that exceeds 10% of their adjusted gross income.… Read the rest
What is Tax Deductible for Homeowners?
Every new homeowner or buyer wants to know about the tax deductions they can claim. Did you know that your home offers a range of tax benefits?
This is the guide you need to read because the new Tax Cuts and Jobs Act (TCJA) has changed some of the tax breaks you have as a new homebuyer or long-time homeowner.
1. Interest on Your Mortgage
Most people don’t realize that within certain limits, you can deduct your mortgage interest.… Read the rest
Under current IRS rules, you can deduct a certain amount in mileage rates if you are using your vehicle for business reasons. Every year, the IRS publishes a list of the current standard mileage rates and the amount you can deduct on your taxes.
Let’s look at the standard mileage reimbursement rate and the types of mileage that are tax-deductible.
How Much is the Current Standard Mileage Rate?
The current standard mileage rate is calculated through an annual study of businesses, where the fixed and variable costs of operating a vehicle for business is calculated.… Read the rest
There are many strategies to use house remodeling and upgrades to reduce your taxes.
Remodeling of your house is not usually a cost that can be deducted from your federal income taxes. However, there are many techniques that you can utilize for home remodeling and upgrades to decrease your taxes. This includes both tax breaks and tax incentives for remodeling and enhancements made to your house, either when you bought the home or after.
Making Use of Your Mortgage to Make Property Upgrades
A good way to reduce the expenses of home remodeling would be to make the upgrades to the residence when it is purchased.… Read the rest
Deciding to become a landlord can be extremely beneficial for you financially. However, it also comes with a significant amount of work.
As well as the general responsibilities associated with running a rental property, you need to find tenants, pay all your expenses, and ensure you have insurance.
In personal tax terms, renting out a property can complicate the situation. There are rental property tax deductions available to help you out with running your business, though.
Different deductions are available from the IRS.… Read the rest
Do you want to reduce your tax bill this year? You can maximize your tax savings by checking to see if you’re eligible to claim any of the new expanded tax credits.
The difference between a tax credit and a deduction is a deduction reduces your taxable income, whereas credits reduce the amount of tax you pay directly. Refundable credits are even better because they can reduce your tax bill even if the credit is worth more than you owe. Non-refundable credits are only valid up to the amount you owe.… Read the rest
The largest tax deduction most people can claim on any type of mortgage is on the interest paid on the loan.
In most cases, mortgage refinance interest is tax-deductible, which means you can take it off your taxable income for that tax year.
But there are rules that apply.
Rules for Making Tax Deductions on Mortgage Interest
First of all, the loan must be on either your primary residence or a secondary residence. If you are taking the deduction on a second residence, this can’t be a rental property.… Read the rest
Kids can be stressful at times, but the good news is they can save your butt during tax time. Today we are sharing some of the tax benefits that kids and other dependents bring to you.
Each child and dependent can bring you a deduction of $4050. This means that the income that is subject to federal tax is reduced. If you are in the 15% bracket, this could save you $607.50, and those in the 25% bracket could save $1012.50.… Read the rest
There are some instances where you may not meet all the tests, but you would be eligible for a partial tax break. If you sell your home due to special or unforeseen circumstances, your tax preparer can talk to you about a capital gains partial exclusion for home sale. These instances would be such as unemployment or a change in your health.
This figure is calculated as a fraction of the time that you would have met the two-year test. Let’s say you lost your job and sold your home after only being in it a year and three months.… Read the rest
Student loan interest can quickly add up. That’s why the Federal government introduced the student loan interest tax deduction to help ordinary students out. If you made interest rate payments on your student loans during the tax year, you can deduct up to $2,500 in interest paid.
If you happen to qualify for the 22% tax rate, you have the best deal because your maximum deduction is $550. A few hundred dollars in your wallet for doing very little sounds great, so how can you make sure that you claim the maximum deduction amount available to you?… Read the rest
Freelancers, contract employees, and business owners know that taxes can be a financial make or break. Tax season is normally a period filled with dread as you try to justify costs and scratch together last-minute work to prepare for the worst.
Thankfully, there are many ways you can save money if you are self-employed.
Of course, you can only make the most of these self-employed tax deductions if you know what they are. You’ve probably spent most of the year stressing about the taxman taking your hard-earned money, but the truth is that you’ve earned the right to claim the self-employed tax deductions that come with having your own business.… Read the rest
Is it possible to get a tax deduction on your home equity loan?
Interest on home equity loans has traditionally been fully tax-deductible. But with the tax reform brought on by President Trump’s Tax Cuts and Jobs Act (TCJA), a lot of homeowners are struggling to work out whether they can still take a home equity loan tax deduction.
The answer is you can still deduct home equity loan interest. But the rules have changed, and there are more limitations than ever before.… Read the rest
The standard deduction is a mechanism that reduces the amount of income that’s eligible for tax. For the current tax year, the standard deduction is worth $12,000 for single taxpayers and $24,000 for married taxpayers filing jointly. If you’re filing as the head of household, it’s worth $18,000.
How Does the Standard Deduction Work?
You can claim the standard deduction even if you don’t qualify for any other tax credits or deductions. Every taxpayer is entitled to it, no questions asked.… Read the rest
In order to claim the home office deduction, you must know the square footage of your entire home and your home office. Auditors do not usually make home visits. If you send them photos of your home office, that is usually all of the verification that they need.
Determine Which Method to Use
Percentage of your home – This method allows you to calculate your home office percentage and then claim the home office deduction. You need to determine the square footage of your entire home and the square footage of your office.… Read the rest
Homeowners are usually well informed about the home-related tax deductions that they can make at filing time. However, when purchasing a home, other costs can quickly accumulate. For buyers who can’t come up with a 20% down payment on the purchase price, they will have the added cost of private mortgage insurance (PMI).
The PMI is a policy that is taken out by the homebuyer to protect the lender against possible default on the mortgage loan.
PMI is Tax-Deductible
This income tax deduction was developed as an element of the Tax Relief and Health Care Act of 2006 and initially added to private mortgage insurance (PMI) plans issued in 2007.… Read the rest
The Tax Cuts and Jobs Act (TCJA) completely changed the US tax system. The last such change of this magnitude happened more than thirty years ago. Millions of Americans are now left wondering what they’re entitled to and which deductions are still valid.
One of the most widely taken deductions is the deduction for mortgage interest. The TCJA didn’t eliminate it, but major changes were made. Plus, as a result of other changes, many Americans will now be ineligible to use the mortgage interest deduction going forward.… Read the rest