Everyone knows that taxes are one of life’s unquestionable certainties. What most people don’t know, however, is that there are many exemptions you can claim to lower your tax bills.
Whether it’s credits for your dependents or deductions for certain loans, you can find ways to pay less come tax season with the help of your trusted CPA. If you’re in Nashville, here are just a few of the exemptions you can explore.
- Student loan interest — If you have a college degree, there’s a big chance that you carry student debt. Indeed, about one in eight Americans take out a loan to attend university, with the average amount being a whopping $28,950. The good news is that you can deduct up to $2,500 worth of interest from your taxes. Surprisingly, only one-third of people who qualify for this benefit ever claim it.
- Charitable contributions — The IRS allows philanthropic people to deduct donations from their tax bills. In fact, this rule applies to both monetary contributions and donations in kind. But did you know that certain charitable actions are tax-deductible, too? For instance, if you volunteered to drive your vehicle in service of a non-profit, you could deduct part of your gas usage. Just be sure to keep your receipts so you can file them along with your tax return.
- Jury duty fees — Employees who are called to do jury duty are often compensated by the court for any expenses they may have incurred in the process. Of course, any earnings must be reported to the IRS, but the agency does allow you to deduct any jury duty fees that you turn over to your employer.
- Childcare credit — There are no two ways about it: daycare in America costs a lot of money. Fortunately, you can get a childcare credit between 20% to 35% of your daycare expenses to help offset the cost. Should your employer offer a childcare reimbursement account, you could potentially save even more money since any repayment you receive is exempt from both federal income and payroll taxes.
- Credits for dependents — But what if you have older kids? Not to worry—you can qualify for a $500 credit for children older than 16 years old. You can also claim the same benefit if you care for relatives like a sick parent or spouse. This benefit is applicable only to single people who earn less than $200,000 or couples who make below $400,000.
As the old saying goes, a dollar kept is a dollar saved. So before filing your taxes, ask yourself if you qualify for any of the deductions or credits above.
Need help reducing your tax bill? Let a Nashville CPA review your finances to spot potential opportunities for savings. Get in touch with Evan Hutcheson today!
What tax deductions and credits can I claim?, USAToday.com
20 Most-Overlooked Tax Breaks and Deductions, Kiplinger.com