Understanding tax deductions and exemptions is crucial for minimizing your tax liability. These are adjustments to your income that can significantly reduce the amount of tax you owe.
Deductions:
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Itemized Deductions: Instead of taking the standard deduction, you can itemize specific expenses, such as:
- Medical Expenses: Exceeding a certain percentage of your adjusted gross income (AGI).
- State and Local Taxes (SALT): Including property taxes, income taxes, and sales taxes (with limitations).
- Charitable Contributions: Donations to qualified organizations.
- Mortgage Interest: Interest paid on your home loan.
- Home Equity Interest: Interest on loans secured by your home.
- Certain Business Expenses: If you are self-employed.
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Standard Deduction: This is a fixed amount that you can subtract from your adjusted gross income (AGI). The standard deduction amount varies based on your filing status.
Exemptions (No longer available after the Tax Cuts and Jobs Act of 2017):
- Personal Exemptions: Prior to 2018, taxpayers could claim exemptions for themselves, their spouse, and any dependents. However, these were eliminated by the Tax Cuts and Jobs Act.
Key Considerations:
- Itemized vs. Standard Deduction: You can choose to itemize your deductions or take the standard deduction, whichever results in a lower tax liability.
- Tax Planning: Careful tax planning can help you maximize deductions and minimize your tax burden.
- Consult a Tax Professional: If you have complex financial situations or are unsure which deductions you qualify for, it’s highly recommended to consult with a qualified tax professional.
Disclaimer: This information is for general guidance only and does not constitute tax advice. Tax laws are complex and subject to change.
Call to Action:
- Need Help? If you have questions about deductions, exemptions, or need assistance with your tax return, contact our experienced tax professionals. We offer a wide range of tax preparation and filing services.
- Schedule a Consultation: Call us today to schedule a free consultation and discuss your specific tax needs.
Website Links: USA Filer (Tax Return Filing)
