Types of Tax Deductions

Tax season is upon us, and it can be a pretty crazy time. In the midst of the chaos that is tax preparation, don’t forget about the tax deductions that could help you. In this blog, we will walk through different types of tax deductions that are available.

A standard tax deduction is the fixed amount that you will not be taxed on each year. That amount of money is set for each tax season and is determined based on several factors, including your age and filing status.  

An itemized tax deduction is an expense taken out of your adjusted gross income (AGI). If the expense qualifies, it is subtracted to decrease the amount of income on which you will be taxed. You can either take the set standard deduction you are eligible for, or you can itemize your deductions if they are greater than the standard deduction and give you a greater benefit. According to the US News article “Your Guide to 2020 Tax Deductions” some itemized deductions include: charitable contribution, home interest, medical expense, and state and local tax deductions.

An above-the-line tax deduction is taken away from your income to determine your AGI, unlike an itemized deduction that comes out of your AGI. Even if you use the standard deduction, you can still claim above-the-line deductions. According to the same US News article, examples of these deductions include: alimony, educator expenses, health savings account contributions, IRA contributions, self-employment deductions, student loan interest, and charitable contributions.

Taxes can be pretty overwhelming, but don’t miss out on any of these deductions that could help you. If you still have questions or need help with your taxes, call today. AMJ will make sure you aren't paying more than you should!

SOURCE 

https://money.usnews.com/money/personal-finance/taxes/articles/your-guide-to-tax-deductions