What You Need to Know About Tax Deductions
What You Need to Know About Tax Deductions?
Tax deductions can help you save money— but only if you know what they are, how they work, and how to claim them. Here is a little guide to help you out.?
What is a tax deduction??
Tax deductions lower your taxable income and in turn, reduce your tax liability. You can subtract the amount of a tax deduction from your income, lowering your taxable income. The lower your taxable income is, the lower your tax bill.?
How to claim a tax deduction??
There are two ways to claim tax deductions: You can opt for a standard deduction OR you can itemize deductions.?
?Standard Deductions:?
Basically, the standard deduction is a flat-dollar, unconditional reduction in your adjusted gross income. The amount you can qualify for depends on your filing status.?
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Itemizing Deductions:?
By itemizing, you can cut your taxable income by taking any of the many available tax deductions you likely qualify for. The more you can deduct, the lower your tax bill. It may be difficult for you to get started with an Itemized deduction on your own, so contacting a tax professional can be helpful. Since the enactment of the Tax Cuts and Jobs Act, available itemized?deductions have been substantially reduced. Medical expenses, state & local taxes - limited to $10,000, mortgage interest, and charitable donations are the available options to itemize.?
Itemized vs. Standard deductions:?
Here’s what the choice comes down to:?
?A Helpful Deduction: Charitable Contributions?
As we find ourselves reaching the holidays, it is helpful to remember the deduction for charitable contributions.?In 2021, U.S. taxpayers can deduct up to $300 in charitable donations made this year, even if?you?choose to take the standard deduction.?This deduction doubles for legally married couples. You can deduct $600 in charitable donations?in 2021, even if you take the standard deduction.?However, keep in mind that December 31st?is the deadline to make charitable donations for 2021.?
Talk to your tax expert about which option is best for you. CKH Group is happy to help, reach out here to schedule a free consultation with one of our tax professionals today.?
The above article only intends to provide general financial information and is based on open-source facts, it is not designed to provide specific advice or recommendations for any individual. It does not give personalized tax, financial, or other business and professional advice. Before taking any form of action, you should consult a financial professional who understands your particular situation. CKH Group will not be held liable for any harm/errors/claims arising from the articles. Whilst every effort has been taken to ensure the accuracy of the contents we will not be held accountable for any changes that are beyond our control.