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
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
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
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
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
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