Guide to tax deductions

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Guide to tax deductions

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By admin

What are the most common tax deductions available to individuals in the ?

Guide to Tax Deductions

What are tax deductions?

Tax deductions are reductions in taxable income that can lower your tax liability. In other words, they are expenses that you can subtract from your income to reduce the amount of income subject to tax.

“By taking advantage of tax deductions, you can not only reduce the amount of taxes you pay but also increase your tax refund.”

List of Tax Deductions

Here’s a list of some common tax deductions:

  1. Charitable donations
  2. State and local taxes
  3. Medical and dental expenses
  4. Home mortgage interest
  5. Job-related expenses
  6. Education expenses
  7. Retirement contributions

It’s important to keep track of all your expenses throughout the year so you can claim tax deductions when you file your tax return.

“Make sure to keep accurate records of all your expenses, including receipts and invoices.”

Limitations to Tax Deductions

While tax deductions can help reduce your tax liability, there are limits to how much you can deduct. Here are some limitations to keep in mind:

Expense Limitation
Charitable donations Up to 60% of your adjusted gross income (AGI)
State and local taxes Up to $10,000
Medical and dental expenses Amounts exceeding 7.5% of your AGI
Home mortgage interest Interest paid on the first $750,000 of debt
Job-related expenses Must exceed 2% of your AGI
Education expenses Up to $4,000 for qualified education expenses
Retirement contributions Up to $19,500 for 2021 (or $26,000 if age 50 or older)

It’s important to check the latest tax rules and regulations to make sure you are taking the correct deductions.

“Consult with a tax professional or use tax software to ensure you are correctly deducting expenses.”

Conclusion

Tax deductions can help you reduce your tax liability and increase your tax refund. By keeping accurate records of your expenses and understanding the limitations of tax deductions, you can take advantage of these valuable tax-saving opportunities.

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