Taxes are a reality for everyone. Most of us try to pay as little as possible. This is one of the reasons why we should pay attention to tax deductions to limit the amount of taxes we have to pay. Many of us don’t realize how many deductions were eligible for. There are at least ten tax deductions that are worth exploring.
State Sales Tax, Reinvested Dividends, Out-of-Pocket Charitable Contributions
You can take advantage of state sales tax deductions to save on your tax liability. You’ll need to use the IRS sales tax calculator. However, your state and local taxes are limited to $10K, or under per year. If you’re an investor you can subtract your reinvested dividends from your tax liability. Your reinvested dividends are part of your cost basis. This cost basis isn’t considered a deduction but it is a cost you can subtract from your tax liability. If you make contributions to charities you can deduct your out-of-pocket expenses. for example, you can deduct the cost of groceries or ingredients you may have purchased to make soup for a soup kitchen. Although these expenses are small, they add up.
Student Loan Interest, Moving Expenses, Child/Dependent Care Tax Credit
You can also deduct the interest you pay on your student loans. You can deduct up to $2,500 in student loan tax. Any money you spend on moving may be eligible for a tax deduction as well. The money you spend on childcare can be deducted from your taxes liability as well. If you pay for your childcare through a reimbursement account set up at work, you are eligible to deduct up to $5K.
Earned Income Tax Credit (EITC), State Tax (last spring), Refinancing Mortgage Points
You may also be eligible for earned income credit which is designed to supplement the earnings of low to moderate-income people. However, other people who lost a job, had a deduction in pay, and worked fewer hours during the previous year, can also take advantage of EITC. Prior state tax as well as refinancing mortgage points can also be deducted.
If you have jury duty but still receive pay while you serve, your company may ask you to submit the funds you make for jury duty to your company. In turn, you have the right to deduct from your taxes so that you aren’t taxed on the money you made from jury duty. There are many tax deductions that you may be eligible for. Exploring ten common tax deductions can help put more money back in your pockets.