We are now currently in a new tax year and we have found some tips to save you a pretty penny on taxes! We have outlined the 8 secret tax deductions you need!
Feeling like the IRS is bleeding you dry? That’s not uncommon, especially when understanding what you can deduct is so darn confusing.
Tax deductions don’t have to be Greek to you, you can read about some clever ones below.
1. Health Insurance Premiums
Are you someone that pays a lot for health insurance or at least goes in for health appointments a lot? Your premium could be a tax break, or you could at least get some of what you spent on copays and medication back.
To qualify for this tax cut, you need to make sure you meet the qualifications. How much did you make last year, on your adjusted gross income?
What percentage were your deductible medical expenses of that amount? If your deductible medical expenses were more than 7.5 percent of the AGI, you can claim that on your taxes.
However, the government has raised that threshold in 2019. Now, you have to spend 10% of your AGI. Unless that is if you’re self-employed and you’re paying for your whole health insurance plan.
If that’s the case, you might be able to deduct 100% of your premium cost. It’ll come off your adjusted gross income instead of being an itemized deduction.
2. Supplies for the Classroom
The average teacher spends something like $2,000 a year on products for their classroom. Whether that’s pencils for kids who can never find theirs, art supplies, or even textbooks – that’s a lot of money.
Especially when the average teacher makes around $20,000 than the average American income.
The IRS won’t help you out with two thousand dollars of supplies, but you can get about $250 back. As long as you’re qualified, licensed, and registered with the state, it’ll get subtracted from your income.
So even though it doesn’t seem like much, it’s $250 you don’t have to pay taxes on, that you would have before.
3. You Got a Babysitter. . . While You Volunteered?
You know that this one had to come from some court case because it’s so darn specific. If you’re someone that volunteers often and has kids, you can write off the cost of babysitting as a charitable contribution.
You can only do so if, and this is important, that you can prove you were volunteering at the same time as the sitter was there.
Since you usually pay babysitters in cash, this is where it gets a little tricky. You may have to ask her if a check is ok, then you’ll want to keep that check with your records. When you itemize it or send it to your accountant, make sure the check and the documentation of your volunteering shift are together.
4. Charitable Gifts in General
So many people were moved by the Marie Kondo special that there was a big surge in donations at the beginning of the year.
But almost none of those families itemized their donations correctly. A donation receipt only helps if you have photos and listed values of all your items.
When you’re donating things, write down the item, how much you paid (you can estimate) and the condition of the item. You can find sites online that tell you what your item is worth in the condition it’s in now.
5. Mortgage Interest
The interest that you pay on your home loan is tax deductible. The amount you can deduct depends on how much your home is worth. For example, you used to be able to write off interest on a mortgage up to one million dollars.
However, the laws changed recently and now the one million dollar interest rule only works if you bought your house before the end of 2017.
If you bought your house after December 15, 2017, then you can only deduct the interest on your mortgage up to $750,000.
If you have a house with interest that high, you no doubt need to write off some taxes.
This works for second homes too, whether you’ve bought them or built them. Loans for remodels and extensions apply to this rule too, so if you’re feeling ready for some changes, the tax savings are there for you.
6. Dental Costs
Whatever your insurance doesn’t reimburse you you’re allowed to itemize as a deduction. As long as they’re expenses that pay for the diagnosis, treatment, or prevention of disease.
7. Self-Employed Social Security
When you’re self-employed full time, you have to make the contributions to your social security and Medicare that your employer would’ve had to. That means that 15.3% of your income is coming out of your pocket.
However, since you’re your own employer you get to deduct the 7.65% that your employer would have paid from your taxes.
It doesn’t seem like much, but it’s half of what you would’ve paid – so that’s always a plus.
8. Random Work Expenses
Finally, you can probably deduct more work supplies than you thought you could. If you use it for your work, or at work, and can prove that it helps your business, you’re off the hook for taxes on those purchase costs.
These strategies are creative, so make sure you’re working with a tax professional who can ok your deductions before you send them through.
Tax Deductions for The Creative Person
Whether you really need to knock money off your taxes or you just don’t want to pay the government, then you can use our tips.
These tax deductions do require some communication with your accountant – but they could save you tons. Make sure you keep track of receipts and itemize everything, then you’ll be all set and on your way to savings,