Understanding the Available Deductions and Credits to Minimize Your Tax Liability
Filing taxes can be overwhelming, especially if you’re not familiar with the deductions and credits available to you. By taking advantage of these tax breaks from a reliable tax service provider like us, you can lower your taxable income and reduce your tax liability. In this blog post, we’ll cover some of the most commonly available deductions and credits to help you get started.
Deductions
Deductions are expenses that can be subtracted from your taxable income. By lowering your taxable income, you may be able to reduce your tax liability. Here are some common deductions you may be eligible for:
- Standard Deduction – The standard deduction is a fixed dollar amount that reduces your taxable income.
- Itemized Deductions – Itemized deductions are expenses you can deduct if they exceed the standard deduction. Common itemized deductions include medical expenses, state and local taxes, mortgage interest, and charitable contributions.
- Retirement Contributions – Contributions to a traditional IRA or 401(k) are deductible up to a certain amount, depending on your income and age.
Credits
Credits are dollar-for-dollar reductions in your tax liability. They can be more valuable than deductions because they reduce your taxes directly. Here are some credits you may be eligible for:
- Earned Income Tax Credit – This credit is available to low-income earners and can be worth a substantial amount.
- Child Tax Credit – The Child Tax Credit can be worth a significant amount per child under the age of 18.
- Education Credits – There are two education credits available: the American Opportunity Tax Credit and the Lifetime Learning Credit. These credits can help offset the cost of higher education.
In conclusion, understanding the available deductions and credits can help you minimize your tax liability and keep more of your hard-earned money. Consult with a tax professional or reliable tax service provider like AWS Taxes to ensure you’re taking advantage of all the tax breaks you’re eligible for. Call (561) 674-5575 for professional tax preparation and other services in the Boca Raton, FL area!