Are you aware that, on average, Americans will pay over $525,000 in taxes during their lifetime?
That’s a dizzying amount of money, which makes you wonder how you can reduce that amount while still following the law. With different types of businesses and situations come different types of tax deductions. If you want to be successful, you must learn how to take charge of your finances.
Are you wondering what you can do? Keep reading to learn about the different types of tax deductions you can write off.
Donations
As an individual or a small business owner, you can deduct your charitable donations from the previous year. The catch is that you can only deduct up to 60% of your AGI (adjusted gross income).
Even if the donation wasn’t cash, you can still deduct the value of physical items that have been donated. This is a win-win situation in which you can engage in philanthropy while also paying less in taxes.
Mortgage Interest
Aside from the technicalities of business ownership, there are also deductions you can get as a homeowner. For example, you can end up deducting the interest you pay on your mortgage every month.
Of course, there are limits. The deductible interest applies to $750,000 of the mortgage’s worth.
Business Expenses as a Freelancer
If you want to run a smart business from home, then it’s important to deduct your business expenses when filing your taxes.
As a person who is self-employed, you can deduct all kinds of items, such as the cost of an office chair, a laptop charger, and anything else that’s essential for conducting business from home.
There are even deductions associated with vehicles over 6000 pounds.
Student Loan Interest
Aside from business management matters, there’s the question of student loans. Many students are graduating with a ton of debt these days. Instead of being absolutely overwhelmed by this, you can deduct the interest that you pay on your loans each month.
The catch is that you can’t deduct more than $2,500 worth of interest. If you earn more than $80,000 in terms of adjusted gross income, then you can’t deduct any student loan interest.
Medical Fees
Sometimes unexpected accidents happen. Instead of ruining your financial situation, you can get some of the money back from medical fees by writing them off.
The exact type of medical fees depends on a variety of factors and is often limited based on your AGI.
Ready to Write Off Different Types of Tax Deductions?
Now that you’ve learned about the different types of tax deductions, you can make sure you don’t pay any more in taxes than you need to. After all, just because taxes are unavoidable doesn’t mean you shouldn’t get all the deductions you deserve.
There’s always so much more to learn when it comes to taxes, running a business, and other crucial topics. Our site is dedicated to keeping our readers informed on all the things that matter. Since you’re already here, you should feel free to see what else we’ve published.
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