Know more about Tax Deduction
By TaxAct
In this blog let’s focus on different types of Federal and State Tax deductions according to the tax deduction list. First, let’s understand the meaning of tax deduction.
You’ve probably heard the phrase “you can deduct that” a lot around tax season. But what exactly does that mean?
What Is A Tax Deduction?
The purpose of income tax deductions is to decrease your taxable income, which then decreases the amount of taxes you need to pay to the federal government. To help you reduce your taxable income, we aggregated a huge list of tax deductible items many people often overlook or aren’t sure how to use to their advantage.
How Do I Qualify To Claim Tax Deductions?
In order to claim tax deductions for the current tax year, the expense generally has to occur on or before December 31 of that year.
A lot of federal tax deductions depend on situations that occur during the year. Following is the list of tax deductions:
- Deductions for owning a home
- Deductions for a business
- Deductions for a student
- Deductions for life-changing events
Standard Deduction vs. Itemized Deductions
You have the option of claiming the standard deduction OR itemizing deductions on your income tax return. We go over the differences in the standard deduction and itemized deductions in this article.
In short, a standard deduction is a fixed amount that everyone gets. It ensures all taxpayers have at least some income that is not subject to the federal income tax.
An itemized deduction comes from a list of expenses the IRS approved as eligible income tax deductions to help decrease an individual’s taxable income. The sum of these itemized deductions is used to lower your adjusted gross income (AGI). Depending on the amount of itemized deductions you qualify to claim, itemizing can result in a larger reduction than the standard deduction.
You cannot claim the standard deduction and itemized deductions in the same year.
- Standard Deduction
- Itemized Deduction
Personal Deductions
Use the Schedule A form to report all of your personal deductions.
Below is the personal tax deductions list:
- Vehicle Deduction
- Charity Deduction
- Child Care Deduction
- Dependent Deduction
- Education Deduction
- Job Expense Deduction (not applicable for 2018 returns)
- Medical Deduction
- Mileage Deduction – Check out the Mileage Calculator
- Moving Deduction (not applicable for 2018 returns)
- Personal Property Deduction
- Student Loan Interest Deduction
- Tax Preparation Fee Deduction (not applicable for 2018 returns)
- Tuition Deduction (not applicable for 2018 returns)
- Union Deduction (not applicable for 2018 returns)
Business Deductions
Use the Schedule C form to report all of your small business deductions even if you are self-employed..
Below is the list of business deductions:
- Advertising Deduction
- Home Office Deduction
- Legal Deduction
- Meals Deduction
- Travel Deduction
Trump Tax Deductions
Popularly known as the “Trump Tax Cuts,” these changes to the tax code have been out since Trump took office. Because tax reforms will have a big impact on most American’s tax returns, we have created the following resources to help navigate the changes.
