Popular Tax Deductions and Tax Credits

Popular Tax Deductions and Tax Credits

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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