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Demystifying Deductions: Lowering Your Tax Bill in 2024
Tax season can be overwhelming, but understanding common deductions can help you significantly reduce your taxable income and potentially receive a larger refund. Here at Michael D. Star, CPA, I want to empower you with knowledge! Let’s explore some frequently claimed deductions for 2024 tax filings:
- Medical and Dental Expenses:
Feeling under the weather this year? The good news is that some of your medical and dental expenses exceeding 7.5% of your Adjusted Gross Income (AGI) might be deductible! This includes doctor visits, prescriptions, surgeries, dental work, and even some over-the-counter medications.
How to Claim: Hold onto those receipts! Keep detailed records of medical expenses throughout the year, including explanations of benefits (EOBs) from your insurance and canceled checks. When filing, itemize deductions and include the total amount exceeding 7.5% of your AGI on Schedule A.
- Charitable Donations:
Opening your heart and wallet to worthy causes can benefit you too! Contributions to qualified charities are generally tax-deductible. This includes cash donations, donations of clothing and household goods (in good condition), and even the fair market value of donated vehicles.
How to Claim: Cash donations exceeding $250 require receipts. For non-cash donations valued over $250, get a written statement from the charity describing the item and its condition. Include the total amount of your donations on Schedule A when you itemize.
- Mortgage Interest:
Homeownership comes with perks, and a potential tax break might be one of them! If you itemize deductions, you can deduct the interest paid on your primary residence’s mortgage loan (up to certain limits).
How to Claim: Your mortgage lender will typically send you a Form 1098 at the beginning of the year, detailing the amount of mortgage interest you paid. Include this amount on Schedule A when you itemize.
- State and Local Taxes (SALT):
State and local taxes can take a bite out of your wallet, but some relief might be available. You can deduct either state and local income taxes or state and local sales taxes (but not both). There may be limitations on the amount you can deduct, so consult with your tax advisor.
How to Claim: Gather documentation of all state and local taxes paid throughout the year (W-2s or receipts for estimated tax payments). Include the total amount on Schedule A when you itemize.
- Student Loan Interest:
The burden of student loans can feel heavy, but tax deductions can lighten the load! You can deduct up to $2,500 of the interest paid on qualified student loans. However, income limitations apply.
How to Claim: Your student loan servicer will typically send you a Form 1098-E at the beginning of the year, showing the amount of student loan interest you paid. Include this amount on your tax return following the specific instructions for the deduction.
Remember: This list provides a general overview, and tax laws can change. Consulting with a qualified tax advisor like Michael D. Star, CPA, is crucial to determine which deductions you qualify for and ensure proper claiming. I can also advise you on whether itemizing deductions or taking the standard deduction is more beneficial for your specific tax situation.
Let Michael D. Star, CPA, be your partner in navigating tax season! Contact me today for a consultation.