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Five Most Overlooked Tax Deductions Merit Wealth Advisors

There are always many moving parts to keep track of when it comes time for tax preparation. But with finances tight for many families across the country, ensuring all bases are covered is especially important this year. With this in mind, there may be overlooked tax deductions that can save you thousands.

Just answer simple questions, and we’ll guide you through filing your taxes with confidence. • When you refinance a mortgage, you can deduct the points you pay over the life of the new loan. In the year you pay off the loan, you get to deduct all the points not yet deducted (unless you refinance with the same lender). • Small charitable contributions, including the 14 cents per mile deduction for driving you did for charitable work, can be added to charitable gifts you made during the year by check or payroll deduction.

Red Flags for Tax Auditors

Due to job losses and wage cuts, tens of millions of people and families previously labeled “middle class,” including many white-collar workers, are now categorized as “low income.” The IRS dramatically increased the child and dependent care tax credit in 2021, rising to $4,000 for one child and $8,000 for two or more qualifying children. If you pay for child care while you work, this credit can still lower your tax obligation by more than $1,000 even if it has returned to its previous level for tax year 2022. Only if you itemize deductions are gambling losses tax deductible.

But in return, these employers expect their employees to turn over their jury fees to their company. Plus, this deduction is available to taxpayers even if you do not itemize your deductions. The first is to use the IRS tables that correspond to your state. In addition to these, you can also include sales tax made on large purchases. In unique situations, the cost of some taxes themselves is deductible.

What Is the Difference Between a Tax Deduction and a Tax Credit?

As long as you paid at least $600 in student loan interest over the year, you should receive a Form 1098-E from your lender to claim this deduction. This isn’t a tax deduction or credit, but it can result in significant savings if you have mutual fund dividends automatically reinvested and used to buy additional shares. The tax credit equal to 10% of the cost of energy-saving home improvements is increased to 30% for 2009 and 2010, up to a maximum of $1,500 in the two-year period. The credit applies to biomass fuel stoves, qualifying skylights, windows and outside doors, and high-efficiency furnaces, water heaters and central air conditioners. In addition, the dollar limit on a particular type of improvement, such as the $200 cap on the credit for windows, has been repealed.

Can you write off being scammed 2023?

A provision of the Tax Cuts and Jobs Act of 2017 eliminates the deduction for personal casualty and theft losses for taxable years 2018 through 2025.

The tax deduction for gambling losses is only available if you itemize deductions. Also, the gambling loss deduction is limited to the amount of gambling winnings that you report as taxable income. But in addition to “traditional” gambling losses (e.g., at a casino), the cost of non-winning bingo, lottery, and raffle tickets, as examples, are also considered to be tax deductible gambling losses. Unfortunately, however, the sales tax deduction is added to your local property taxes. And there isa $10,000-per-year maximum for the combined total of these taxes ($5,000 if you’re married filing separately).

Investment Taxes

A credit is so much better than a deduction; it reduces your tax bill dollar for dollar. There is a relatively new exception to rules about deducting interest paid on student loans. In the past, nobody benefitted from taxes for interest paid on a student loan unless they both incurred the debt and paid it themselves.

The Most Overlooked Tax Deductions

Whether you own or rent your home, if you regularly use a portion of it or another building on your property entirely for business, you are eligible for the home office deduction. You may also use mortgage interest points, which are a cost that borrowers pay to lenders in exchange for a reduction in their interest rates. These points typically amount to 1% of the overall loan amount. Every year, millions of people with lower incomes use this credit.

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