Tax season is often associated with the stress of gathering paperwork, sorting through receipts, and trying to understand what deductions you qualify for. However, many people miss out on valuable tax deductions simply because they aren’t aware of what’s available to them. Tax credits can lower your taxable income by a large amount. This means that you owe less in taxes. Understanding the deductions you qualify for can be the key to minimizing your tax liability. Here’s a closer look at some common, yet often overlooked, tax deductions and how a tax preparation service San Antonio can help ensure you’re claiming everything you’re entitled to.
1. Medical and Dental Expenses
A lot of people don’t know that they can deduct medical and dental costs, like health insurance payments, from their taxable income. However, only the amount that exceeds 7.5% of your adjusted gross income (AGI) is deductible. This means if you have high medical bills due to an unexpected illness or treatment, you could be eligible for a deduction that might reduce your overall tax burden.
How a Tax Preparation Service Can Help: A professional tax preparer can help you assess whether your medical and dental expenses exceed the 7.5% threshold and assist you in organizing and claiming these expenses. They can also advise you on other related deductions, such as long-term care insurance or transportation costs related to medical care.
2. State and Local Taxes (SALT)
Property taxes and state and local taxes, like income or sales taxes, can be deducted. However, a lot of people don’t claim these deductions because they don’t keep track of their payments. The SALT deduction is capped at $10,000 ($5,000 for married individuals filing separately), so while the deduction is valuable, it may not always apply if your total taxes are lower than the cap.
How a Tax Preparation Service Can Help: A tax preparation service can help you calculate your SALT deductions by reviewing your state income, property taxes, and any other applicable local taxes. They can help ensure that you maximize this deduction and are not leaving money on the table.
3. Home Office Deductions
If you work from home, you may be eligible to deduct a portion of your home’s expenses. This includes costs like mortgage interest, utilities, and property taxes, which can be pro-rated based on the size of your home office. Many self-employed individuals and small business owners overlook this deduction, not realizing the extent of expenses that can be claimed.
How a Tax Preparation Service Can Help: A professional tax preparer can guide you on how to calculate the space and costs of your home office that qualify for the deduction. They will also ensure that you meet the IRS criteria for this deduction and help you avoid potential pitfalls related to claiming this deduction improperly.
4. Education-Related Expenses
Many people miss out on education-related deductions and credits that can lower their taxable income. If you or your dependents have incurred costs for higher education, there are several tax breaks available, including the American Opportunity Credit, Lifetime Learning Credit, and deductions for student loan interest. While the credits reduce your tax liability directly, deductions for student loan interest can reduce your taxable income.
How a Tax Preparation Service Can Help: Tax professionals can help you navigate the various educational credits and deductions, determining which ones you qualify for and how to claim them. They can also assist you in finding opportunities for future education-related tax breaks, such as saving for education with 529 plans.
5. Charitable Contributions
Donating to charity is not only a noble cause but can also help reduce your tax bill. Charitable contributions, whether in the form of cash or goods, can be deducted from your taxable income, but many people fail to keep proper records or underreport their donations.
How a Tax Preparation Service Can Help: Tax preparation services can guide you through the process of tracking and reporting your charitable donations. They can advise you on how to value donated goods and ensure that you claim the full extent of your charitable contributions. In addition, a tax professional can provide guidance on how to maximize deductions, such as donating appreciated stocks, which could offer tax benefits beyond simple cash donations.
6. Job-Related Expenses for Employees
Though tax law changes in recent years have limited deductions for unreimbursed job expenses, some employees may still qualify to deduct certain expenses, such as business-related travel or continuing education that directly benefits your job. This is more applicable to employees in specific sectors, like teachers, whose out-of-pocket expenses may be eligible for a deduction.
How a Tax Preparation Service Can Help: A tax preparer can help employees determine if they qualify for any job-related expense deductions. They can also help navigate the complexities of these deductions, ensuring you don’t miss out on any valid claims.
Conclusion
Tax credits can help you lower your taxable income and pay less in taxes. They are, however, often forgotten, and the process of claiming them can be hard. A tax preparation service can help you figure out which benefits you can use and make sure you get the most money back. They can help you with things like medical bills, home office deductions, and state and local taxes. If you hire a professional, you won’t miss out on any tax breaks, and you can be sure that your return is correct and full. Hiring a professional to do your taxes is an investment in your financial future that will save you money now and in the future.
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