Looking for ways to make your tax bill more manageable while following all required legislation? In this article, we look at a few of the top readily available tax breaks that may apply to you and your household.
Depending on your situation, you could claim up to $2,000 worth of support per child. It also applies to non-child dependents, for whom you may receive up to $500 each. A related tax break is a Child and Dependent Care Credit, which helps you to afford the costs of care for any dependent for whom you are responsible.
Earned Income Credit
This option also takes into account the number of dependents for whom you are responsible, as well as your current income (it usually needs to be below $57,000 to qualify) and your marital status. As of the time of writing this article, the maximum you can claim is $6,660.
Student Loan Interest Deduction
If you attended a qualifying course at an eligible institution and your current MAGI (modified adjusted gross income) is less than $70,000, your student loan interest may be deductible from your taxable income. You could also get a partial deduction if your MAGI is between $70,000 and $85,000. Find out you if you’re eligible via the Department of Education or IRS websites.
American Opportunity Credit
You can claim up to $2,500 to cover certain educational expenses using American Opportunity Tax Credit, including reading material, equipment and tuition fees. This amount does not cover transport costs.
Medical Expenses Deduction
Qualifying medical expenses can be covered using this tax break. These expenses need to add up to more than 7.5% of your adjusted gross income in order for you to be considered eligible.
Deduction for State and Local Taxes
A variety of property-related taxes, as well as income or sales taxes put in place by the state or your local government, can be deducted to the tune of $10,000, depending on the rules of your local area authority and your marital status (you can claim up to $5,000 if you’re married but applying individually).
Self-Employment Expenses Deduction
If you work for yourself and handle your own tax returns, you may be able to claim back a certain amount to cover the expenses involved in running your business. This can include the cost of various subscriptions, resources, equipment and materials.
Home Office Deduction
If you regularly work from home in a dedicated space for that purpose, you can apply for a tax break to cover the costs of resources such as energy, maintenance and even rent.
Residential Energy Credit
If you decide to invest in solar power, whether you have solar panels installed or opt for a different type of solar energy system, you could claim up to 26% of the cost of their installation.
Depending on your income and your tax filing status, you may be able to claim between 10% and 50% of up to $2,000 worth of your contributions to particular retirement plans, including IRAs, 401(k)s and 403(b)s. If you are married, you can apply as a couple and qualify for up to 50% of $4,000.