Tax write-offs are valuable and knowing when they apply to your life is important to take full advantage of the savings they can offer. For example, someone paying student loans may find the student loan interest deduction to be a powerful tool at tax time, while a small business owner could employ the deduction that lets them write-off profit losses throughout the course of the business year. With that said, here are some more deductions that could apply to your situation:
Student Loan Interest Deduction: As previously mentioned, the student interest deduction allows you to subtract the cost of your student loans from your taxes, and is particularly helpful to those drowning in student loans. It is an above-the-line tax deduction, which means that it has the effect of decreasing your overall taxable income.
Educational Tax Deductions: Many more deductions exist relating to education besides the student loan interest deduction, including deductions for tuition and fees, deductions for teachers and instructors, or furthering your education for a job or work position. Two tax credits are aimed specifically at Americans paying college tuition, known as the American opportunity tax credit (AOTC) and the lifetime learning credit.
The Home Office Tax Deduction: Those working from home have a special deduction just for them called the home office deduction that lets them deduct $5 per square foot for any area of their home used exclusively for work purposes. This credit has a maximum of $1,500, and you will need to keep an eye on your business expenses throughout the year to receive the benefit of this deduction.
Healthcare Tax Deductions: If you meet eligibility requirements, you could be able to subtract your dental and medical expenses from your taxes. There are many healthcare tax credits and deductions on the books, one of the most popular being the health savings account (HSA) credit that can help you simultaneously save tax-free money for healthcare costs while also taking a deduction for contributions made. Also, the health coverage tax credit (HCTC) can help to pay for a portion of health insurance premiums for those who qualify.