The doubling of the standard deduction under the Tax Cuts and Jobs Act of 2017 has resulted in more people than ever forgoing itemization on their taxes and instead just opting for the larger standard deduction to simplify the process. However, there is still a decent portion of Americans who will itemize their taxes, meaning it’s important for them to know the tax deductions that are available to them so they can save the most money possible.
Here’s a quick overview of some surprising tax deductions in Jamestown, ND that you may or may not have been aware of:
- Health insurance premiums: Medical expenses can quickly add up. The good news is that the IRS will allow you to deduct some insurance premiums. If deductible medical expenses exceed 10 percent of your adjusted gross income, you can deduct those expenses, and may be able to deduct 100 percent of premium costs if you’re self-employed and have to pay for your own insurance.
- Sales tax: You can deduct sales taxes or state income taxes off your federal income tax bill. If you are in a state that does not have income taxes, this can result in a lot of savings on your tax bill, and even if you did pay state income taxes, the sales tax break can be a good deal if you made a big purchase in the last year (like a new car).
- Teaching supplies: Almost all teachers will have to pay for some classroom supplies out of their own pocket. The IRS allows K-12 educators to deduct up to $250 for materials. Even if you don’t itemize, this is a deduction you can still benefit from because it gets subtracted from your income.
- Charitable work: You probably know you can get deductions for charitable donations. You might not have known, however, that you can get deductions for out-of-pocket expenses associated with charitable work. If you make something for a charitable fundraiser, for example, such as a baked good or a craft, you can deduct the costs of the materials needed to make that item.
- Babysitter expenses: You can deduct the costs of a babysitter if you are paying them to watch your kids while you’re working. However, you will need to provide the name and Social Security number or tax ID number of the person or organization providing that care, and then they will be responsible for reporting that income.
- Lifetime Learning credit: The Lifetime Learning credit offers up to $2,000 a year for education after high school. The credit phases out at higher income levels, but does not phase out at any particular age, so no matter how old you are, you can get some tax benefits for seeking additional education beyond the secondary level.
For more information about some of the surprising tax deductions in Jamestown, ND you should look into this year, we encourage you to contact a tax preparation specialist at Craig S. Hanson, CPA today. We’d be happy to answer any questions you have about the process of preparing and filing taxes.