Maximize Your Tax Savings with These Common Credit reductions

Are you looking for ways to reduce your tax bill or increase your refund from the IRS? Fortunately, as a taxpayer, you have access to a plethora of deductions and credits that can help you achieve your financial goals.

Mar 4 | 5 minutes read
How to maximize your tax savings

Whether you're interested in tax credits or deductions, there are a few common Credit reductions that you might be eligible to claim. It's also worthwhile to explore potential write-offs for state taxes on your state tax department's website. By taking advantage of these write-offs, you may be able to save money on your next tax return. So, read on to learn more about these deductions and credits and how they can benefit you financially.


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If you itemize your deductions, you may be able to claim a deduction for property taxes. However, there's a catch: under a tax reform law passed in 2017, the deduction for state and local income taxes (including property taxes) is capped at $10,000. This limit is set to remain in place until the end of the 2025 tax year, unless Congress decides to extend it.


Homeowners can reduce their tax bills by deducting the interest they pay on their mortgage. Keep in mind that this write-off is only available for interest on mortgage debt of up to $750,000 (or $375,000 for married-filing-separately taxpayers) that was incurred after December 15, 2017.


You can also deduct state income taxes you've paid, but just like with property taxes, there's a limit. The deduction is capped at $10,000, which includes all deductible state and local taxes. Don't miss out on potential savings by overlooking this deduction!


As a homeowner, you may be able to claim several deductions on your taxes. This includes deducting mortgage insurance premiums, mortgage interest, and real estate taxes that you paid during the year for your home. By taking advantage of these deductions, you can potentially lower your tax bill and keep more money in your pocket.


Donating to charity is not only a good way to help others, it can also help you save on your taxes. You can generally deduct charitable contributions of cash up to 60% of your adjusted gross income, or AGI. Donating items or property can also count as deductible charitable contributions. Consider giving back to your community and potentially saving on your taxes at the same time.


Medical bills can be costly, but at least there's a silver lining when it comes to tax time. You can deduct medical and dental expenses that exceed 7.5% of your AGI. This includes not only the cost of treatment but also medical mileage. Keep track of all medical expenses and you could be surprised at how much you can deduct.


Investing in education is always a smart choice, and it can also provide a tax benefit. The lifetime learning credit lets you claim a tax credit for expenses incurred while attending higher education institutions like community colleges and universities. You can deduct up to $10,000 of expenses for an unlimited number of years, with a maximum credit of $2,000 per tax return.


The American opportunity tax credit is a great way to save on the cost of higher education. You can claim a tax break for the first four years of college, with a maximum annual credit of $2,500 per eligible student. And if your tax liability is zero, you may even qualify for a refund of up to $1,000. Don't miss out on this valuable opportunity to save on your educational expenses.


Saving for retirement not only secures your financial future but also provides a tax credit. Contributions to retirement plans like a 401(k) or IRA can earn you a tax credit of 50%, 20%, or 10%, depending on your adjusted gross income. And with a maximum credit of $1,000, it's a great incentive to start planning for retirement today.


When it comes to tax season, it’s important to know what deductions you’re eligible for to maximize your refund or minimize your tax bill. Here are a few tax deductions that you should consider. An individual retirement account (IRA) is a great way to save for your retirement, and it can also offer tax benefits. If you’re eligible to contribute to an IRA, here’s what you need to know:

  • The maximum contribution for 2022 in a traditional or Roth IRA is $6,000, plus another $1,000 for people who are 50 years old or more.
  • Your contributions to a traditional IRA are tax-deductible.

If you’re self-employed, you can deduct 100% of the health insurance premiums you pay monthly for yourself, your spouse, and your dependents, whether or not you itemize deductions. Here are a few things to keep in mind:

  • If you have kids under 27 at the end of 2022, you can also deduct their premiums, even if they aren’t dependents.
  • You can’t claim this deduction if you’re eligible to participate in a subsidized health plan from an employer for either yourself, your spouse, dependents or kids under 27.


If you have student loans, you may be able to deduct the interest you paid on them. Here’s what you should know:

  • The maximum interest you can deduct is $2,500.
  • The amount you may write off depends on your income.
  • Review the previously mentioned IRS Publication 970 for more information.


In addition to these deductions, there are many other tax breaks you may be eligible for, so it’s important to do your research or consult with a tax professional to ensure you’re taking advantage of everything available to you.



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