Ellen Chang is a freelance journalist who is based in Houston and writes articles for U.S. News & World Report. Chang previously covered investing, retirement and personal finance for TheStreet. She focuses her articles on stocks, personal financ.
Ellen Chang ContributorEllen Chang is a freelance journalist who is based in Houston and writes articles for U.S. News & World Report. Chang previously covered investing, retirement and personal finance for TheStreet. She focuses her articles on stocks, personal financ.
Written By Ellen Chang ContributorEllen Chang is a freelance journalist who is based in Houston and writes articles for U.S. News & World Report. Chang previously covered investing, retirement and personal finance for TheStreet. She focuses her articles on stocks, personal financ.
Ellen Chang ContributorEllen Chang is a freelance journalist who is based in Houston and writes articles for U.S. News & World Report. Chang previously covered investing, retirement and personal finance for TheStreet. She focuses her articles on stocks, personal financ.
Contributor Kemberley Washington Tax WriterKemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make i.
Kemberley Washington Tax WriterKemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make i.
Kemberley Washington Tax WriterKemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make i.
Kemberley Washington Tax WriterKemberley Washington is a tax journalist and provides consumer-friendly tax tips for individuals and businesses. Her work goes beyond tax articles. She has been instrumental in tax product reviews and online tax calculators to help individuals make i.
Updated: Mar 1, 2024, 6:06pm
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Taxpayers can take advantage of numerous deductions and credits on their taxes each year that can help them pay a lower amount of taxes—or receive a refund from the IRS.
You may be able to claim the following 15 common write-offs, which include both tax credits and deductions. Additionally, you may be entitled to write-offs on your state taxes, so check your state tax department’s website to see if you qualify.
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On Datalign Advisory's WebsiteThe maximum contribution for 2023 in a traditional or Roth IRA is $6,500, plus another $1,000 for people who are 50 years old or more. Your contributions to a traditional IRA are tax-deductible.
The amount increases to $7,000 for contributions during 2024, but there’s no change in the catch-up amount for people aged 50 and older.
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, says Robert Charron, a CPA in charge of the tax department at Friedman, a New York-based accounting firm.
If you have kids under 27 at the end of 2023, you can also deduct their premiums—even if they aren’t dependents.
However, you can’t claim this deduction if you’re eligible to participate in a subsidized health plan from an employer for yourself, your spouse, dependents or kids under 27.
Student loan interest can be written off your taxes, but the maximum interest you can deduct is $2,500. The amount you may write off depends on your income. Review IRS Publication 970 for more information.
You may qualify for the adoption tax credit for expenses paid related to the adoption of an eligible child. Some costs that qualify are:
While the credit is nonrefundable, you can carry forward any unused credit for up to five years. The tax credit for the 2023 tax year is $15,950 per child.
If you are self-employed or a partner, you can deduct business expenses that are related to your home. However, you can’t take the home office deduction if you are an employee.
Two options are available when deducting the home office deduction: the simplified method and the regular method. The simplified method is easier to use. You multiply the square footage of your home office by $5. You can deduct a maximum of $1,500 (up to 300 square feet).
The regular method allows you to claim actual expenses, such as rent, mortgage interest and repairs, based on the percentage of your home that’s dedicated to your home office. For example, let’s say your home office is 400 square feet, and your total home square footage is 1,600. You can claim 25% (400/1,600) of your total qualified home-related expenses.
You may claim up to 30% of qualified home improvements, including solar water heaters and solar electric panels installed from 2022 through 2032. After 2032, the credit percentage rate decreases to 26% for qualified solar installations that are placed in service in 2033 and 22% for those in 2034.
The credit is nonrefundable. However, you can carry any remainder forward to future years until the credit is exhausted.
Keeping a good record of your income and deductible expenses in a spreadsheet throughout the year can make filing taxes a lot quicker and easier.
“Preparing and organizing everything for your taxes can seem like a daunting task, but a lot of people come across the same common mistakes,” Fan says. “Don’t forget to always include all sources of income, make sure you are looking for and including all possible deductions, and understand the difference between a deduction and a credit.”
Some common mistakes people make include:
If you are filing taxes with several deductions, start by gathering all the appropriate paperwork, such as Form 1098, Mortgage Interest Statement, for mortgage interest deductions. For other deductions, which are based on expenses or contributions, keep accurate records.
“If you itemize your deductions, then keep track of qualified medical expenses, charitable contributions made, or any other deductions which can be itemized,” says Fan. “If you are likely to take the standard deduction, then record keeping will not be as important.”
While a tax credit and a tax deduction each reduce the amount you owe, a credit is generally more beneficial. That’s because a credit reduces the taxes you owe dollar for dollar, whereas a deduction reduces your taxable income, so that the amount you save is based on your applicable tax rate.
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ContributorEllen Chang is a freelance journalist who is based in Houston and writes articles for U.S. News & World Report. Chang previously covered investing, retirement and personal finance for TheStreet. She focuses her articles on stocks, personal finance, energy and cybersecurity. Her byline has appeared in national business publications, including USA Today, CBS News, Yahoo Finance MSN Money, Bankrate, Kiplinger and Fox Business. She is a proud graduate of Purdue University and a lover of random acts of kindness, volunteering and cats and dogs. Follow her on Twitter at @ellenychang and Instagram at @ellenyinchang.
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