Will you have to cut a check to Uncle Sam, or will you get a plump refund?
Tax deductions can tip the scales a lot meaning youll end up sending less money to the IRS.
Read on to understand which common tax deductions you could claim when youfile your tax returnfor 2024.
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What Is a Tax Deduction?
Tax deductions, also known as tax write-offs, lower your taxable income so youll pay less overall.
However, your itemized deductions have to exceed your standard deduction or it is not smart to itemize.
The standard deduction amounts for tax year 2024 are:
Tax deductions are different fromtax credits.
Do you know how much you make each year?
What about the amount you contribute to retirement?
Whats left over is your AGI.
The main change affecting everyday Americans was to the standard deduction.
In 2017, it was $6,350 for single filers and $12,700 for married couples filing jointly.
Under the new law, it nearly doubled.
These include:
The higher standard deduction made itemizing less worthwhile for many taxpayers.
But now choosing the standard deduction often yields the bigger tax savings.
Standard vs. Itemized Deductions
Still, a number of itemized deductions remain in play.
Here are some common deductions.
The IRS must designate the organization as a nonprofit.
Usually these are religious, educational or charitable groups.
There are some limitations on what you could include in this deduction.
(Most people cant afford to donate half their income to charity anyway.)
But there are additional limits depending on the organization.
Luckily, it’s possible for you to deduct that interest from your taxable income.
This is applicable for debt up to $750,000 or $375,000 if youre married filing separately through 2025.
Property Taxes
The 2017 tax reform put new limits on property tax deductions.
Those caps are for state and local income, property and sales taxes combined.
Your deduction is limited to $10,000.
Prior to tax reform, you could have deducted each of these expenses in full.
The bills must equal 7.5% or higher of your AGI to qualify for the deduction in 2024.
Even then, you could only deduct the amount above 7.5% of AGI.
Qualified medical expenses include:
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Theyre known as above-the-line deductions.
Educator Expenses
In an ideal world, teachers wouldnt have to pay out of pocket for school supplies.
This only applies for people filing their own tax returns.
You also cant claim this deduction if your loan isnt in your name.
So, if your parents took out the loan on your behalf, they will get the deduction instead.
Moving Expenses for Military
Members of the military are eligible to deduct moving expenses from their taxable income.
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4.
Self-Employment Expenses
If youre self-employed, you’ve got the option to deduct quite a few expenses.
These include:
6.
Health Insurance Premiums
If you are self-employed, you’ve got the option to deduct your health premiums.
The maximum contribution for 2024 was $7,000, and $8,000 for those over age 50.
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