Tax Deductions for the State of California

Many of us know that taxes vary from state to state and the deductions for each state vary as well. Not only does the state account for the cost of living, but it also accounts for the status of filing, such as married filing jointly or single.
 The State of California is known to have unique tax issues that are specific to the state. If you are in the Los Angeles area, talk to the tax professional Larry Gurewitz, a tax professional, to ease your stress when trying to file your California state tax return.

Tax Deductions

The main goal of tax deductions is to reduce the overall taxable income, with the ultimate goal of reaching a lower tax bracket. Though a lower tax bracket may only realize you a difference of a few pennies for each dollar, it will add up over the entire year’s income.
 For the state of California in tax year 2015, you have a standard deduction amount of $4,044 if you are single or married and filing separately, and $8,088 if you are married and filing jointly.
 The other method to claim deductions on taxes is to itemize your deductions. Within the state of California, there are certain parameters that you need to meet in order to have your itemized deductions qualify. Seek out the advice of a qualified tax professional in order to determine which method would work best for your personal tax situation.
 Some of the biggest deductions that people receive are in connection with their home.

• You can receive a deduction for the mortgage interest paid to a lender.
• If you choose to pay the discount points when you purchased a home, then those points can be tax deductible.
• For those people who are in states and local entities that require you to pay real estate taxes, these can also become tax deductions. If your mortgage lender provides an escrow for the taxes and insurance, the lender will send you a statement of how much has been paid towards the property taxes.
• Certain types of home improvement projects can be tax deductible. Home improvements that would qualify for this type of tax deduction are renovations to your home to accommodate an ill or disabled person. Importantly, the value of your home does not increase with the needed renovations.
• Though this deduction can be considered hard to handle, you are able to make qualified tax deductions for your home office. Find a tax preparer in California for the appropriate filing and needed qualifications.

One tax deduction that most people forget, and end up leaving money on the table, is the cost associated with job hunting. You can deduct expenses such as cab fares, other transportation expenses like parking and tolls, employment agency fees, and the cost of printing resumes and business cards. These deductions do not apply for those people who are seeking their first job. For those people who did get their first job in 2015, there are special deductions for them, such as deducting moving expenses.

Tax Credits

Tax credits are different from tax deductions. A tax deduction works to reduce the overall taxable income of the person who is filing, but a tax credit is a direct reduction of the total amount due to the federal or state government. The state of California offers a variety of different tax credits that can help the reduce the tax bill. Many of them are specific to California working families.

• Earned Income Tax Credit
  • For those people who work and earned income in the state of California
• Child Tax Credit
  • This is also sometimes referred to as the Dependent Tax Credit
  • For those people who are able to claim a dependent on their taxes
• The Renter’s Credit
  • Taxpayers who rent and qualify can receive a tax credit up to $120
• Child and Dependent Care Tax Credit
  • This credit varies on the income of the filer
  • The filer must live with the dependent for at least half a year.

For many parents, especially new parents, they may not know that they can receive a tax credit for the cost of child care while they are working.  Credits like these can add up, so it is important to speak with an experience tax preparer about your life situation so you can take advantage of all the tax deductions and credits available to you.

Getting a Professional’s Help for Your Taxes

The tax professional, Larry Gurewitz, can assist you with finding the right deductions for your personal tax needs. Everyone fears paying too much taxes or the potential of getting audited. Let Larry ease all of your tax fears. Click on the profile link below for more information or use the Contact button below to get started.