What Is A Tax Deduction?
You’ve probably heard the phrase “you can deduct that” a lot around tax season. But what does that mean exactly?
The purpose of 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 deductions many people often overlook or aren’t sure how to use them 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 have to occur on or before December 31 of that year.
A lot of deductions depend on situations that occur during the year.
- 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 review, 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 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 can not claim the standard deduction and itemized deductions in the same year.
- Standard Deduction
- Itemized Deduction
Use the Schedule A form to report all of your personal deductions.
- Vehicle Deduction
- Charity Deduction
- Child Care Deduction
- Dependent Deduction
- Education Deduction
- Investment Advisor Fee Deduction
- Job Expense Deduction
- Medical Deduction
- Mileage Deduction – Check out the Mileage Calculator
- Moving Deduction
- Personal Property Deduction
- Student Loan Interest Deduction
- Tax Preparation Fee Deduction
- Tuition Deduction
- Union Deduction
- 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.