What Types of IRS Deductions Are There?
One of the most important aspects of paying taxes for a large majority of Americans is the potential of getting back a refund check or even a direct deposit that can infuse some very helpful cash back into your budget. Whether you are single, married or raising a family, the refund is a big part of what we would like to see after April rolls around. Even for those who do not rely on these refunds, the fact is, if you can pay less using the IRS deductions that are available to you, it is a very smart idea to take advantage of it.
By taking advantage of these deductions, you reduce the amount of tax you pay and that’s a great way to help you keep more of your money where you want it: in your own bank account. Plenty of people are eligible for the Standard Deduction and that gives you a nice amount off the amount of your income that ends up being considered taxable by the IRS. Since even an individual filing under the Single status can get over $5,000 deducted this way and double that for those filing jointly as a married couple, it is a very smart deduction to take and you should go for it first.
While itemizing is certainly a great way to save some money on your taxes, it is a complex process and many people find it a lot easier to take what are called ‘above the line’ IRS deductions because these are simpler. Things like educations costs such as student loan interest paid or tuition paid, expenses from making a move from one home to another for a job transition, and contributions to an IRA – these are all above the line deductions that can help you reduce your taxable income and thereby reduce the amount of tax that you must pay to the IRS. When you itemize your deductions, things definitely get trickier, but you will find that you have many more deductions available to you.
The process of listing out all of the deductions you wish to claim can be time consuming, but you can claim a wide range of expenses such as costs of medical or dental treatments that you have paid for over the course of the year, income taxes you have had to pay at the state or local level, and any losses that you have had to cover due to a casualty such as theft, damage from storms or a fire.