Understanding available deductions and credits is crucial for maximizing tax savings. Explore some of the most popular ones to lower your tax bill and potentially increase your refund:
1. Mortgage Interest Deduction:
Homeowners can deduct mortgage interest payments, offering significant savings, especially for those with substantial mortgages.
2. State and Local Tax Deduction (SALT):
Taxpayers who itemize can deduct state and local income, sales, and property taxes, up to a combined limit of $10,000.
3. Charitable Contributions Deduction:
Donations to qualified organizations are deductible, whether in the form of money, property, or volunteer work.
4. Education Tax Credits:
Higher education expenses may qualify for credits like the American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit, reducing tuition costs.
5. Medical and Dental Expenses:
Deductible medical and dental expenses exceeding 7.5% of adjusted gross income can lower taxable income.
6. Child Tax Credit:
Families with qualifying children under 17 may claim the Child Tax Credit, offering up to $2,000 per child.
7. Retirement Savings Contributions Credit (Saver’s Credit):
Contributions to retirement plans like a 401(k) or IRA may qualify for the Saver’s Credit, worth up to $1,000 for individuals and $2,000 for couples.
8. Energy-Efficient Home Improvement Credit:
Investing in energy-efficient home improvements may qualify for a tax credit of up to 10% of the improvement cost, with a maximum credit of $500.
While these deductions and credits offer significant savings, not everyone qualifies for all of them, and eligibility may vary annually. Consult the IRS website or a tax professional to determine which deductions and credits apply to your situation.
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