Your Biggest Tax Write-Off's Explained

Millions of tax payers over pay their taxes every year because some of them are unaware of the tax deductible elements while a few of them overlook the items. But as affirmed by the IRS, the tax season is starting from Tuesday, January 19, 2016 which is why most taxpayers may be thinking about the tax deductible items to get tax benefits.

Let’s have a look at some of the common tax write-offs that can cut down your tax bill to the bone and significantly reduce your tax liability.

Those who get a loan by keeping their homes as mortgage can claim for a home mortgage interest deduction. The IRS only grants tax benefit when the loan is on your main home or a second home including a second mortgage, home equity credit or a line of credit loan. For this reason, you must make sure that you have an ownership interest in the home and you are the responsible party to pay for the loans as you are not permitted by the IRS to get a tax deduction for paying the mortgage for a home owned by somebody else.

Furthermore, your local tax preparer at EB Tax Consultants located in Brooklyn, New York can file Form 1098 to claim the total interest paid during the past year for your home. Prior to claiming deductions on home mortgage interests you must know your adjusted gross income (AGI) limits and other limitations.

If you have made huge charitable donations during the last year, then you must not forget to claim write offs for them. Donating to a charitable organization can be one of the best tax planning strategies as they save most of your money. In order to claim for the tax deductions, you need to fit in the necessary requirements.

• It is best to submit your donations in the form of cash or property
• Go for a qualified charitable organization
• Make sure you are eligible to itemize the deductions
• Do not forget maintaining excellent and organized record of your donations

Moreover, you must understand the limits on your adjusted gross income (AGI) for your donations. Charitable contributions are usually limited to 50% of your AGI. But in some cases, 20% to 30% of your income can also be considered for claiming tax deductions. You must take guidance from an expert tax preparer for information specific to your own circumstances.

Taxpayers are permitted to deduct the state and local income taxes they pay during the year. But there is one condition that all taxpayers must keep in mind prior to claiming tax deduction on income taxes; they cannot deduct state and local income taxes that are paid on income exempted from federal income taxes. You can only claim for that exempted income until it is interest income. Your local tax preparer, EB Tax Consultant in Brooklyn, New York will help you in understanding the following requirements for tax deductions on income taxes.

• You do not need to pay state and local income taxes as a lump sum amount
• You are permitted to deduct withheld taxes and estimated tax payments
• You must not deduct federal income taxes paid
• You are not allowed to deduct employment taxes withheld with the state such as Medicare, Social Security and Railroad Retirement taxes

As long as your real estate property is valuable, you are permitted to claim on local and foreign taxes deduction. This means that the taxes for the local benefits and improvements which generally increases the worth of the real estate property will not considered as deductible items. Similarly, the state and local fees for the services such homeowners’ association fees and trash pick-up and do not come under deductible items.

But if you choose to pay your real estate taxes together along with your mortgage then you will be required to pay taxes on Form 1098. Or else, the amount of the deduction will be paid by check or any other cash equivalent made during the year. If you are still confused about the real estate taxes, you must consider hiring a tax preparer.

The ones who are concerned about their tuition fees and educational expense for their children, spouse or any dependent must remember that the IRS gives them tax benefit. They are allowed to deduct up to $4,000 from their school related expenses. In addition to this, they are also given leverage for a student loan with interest i.e. up to $2,500. Also, there are two tax credits which can save your investments

• Lifetime Learning Credit
• The American Opportunity Tax Credit

The IRS Pub 970 contains all the relevant information regarding tax deductions for educational expenses. You can ask your tax accountant, EB Tax Consultant in Brooklyn, New York in order to understand the technicalities and ins and outs of the document.

A veteran tax preparer always guides their clients to claim for every kind of tax deduction in order to save their money and investments. Moreover, the IRS has mentioned all the different types of deductions in Publication 535.

• Tax deductions on medical and health costs
• Expenses incurred on job hunting
• Expenditures on advertising and promotional costs
• Tax deductions on life-changing events
• Charity tax deduction
• Standard and itemized tax deductions
• Teachers and educators deductions
• Miscellaneous/other tax deductions

If you are still confused about whether you qualify for tax deductions, get in touch with EB Tax Consultants located in Brooklyn, New York. We have a team of the best tax preparers who can seamlessly handle your tax credits and deductions and help in keeping your tax bills lower by reducing your taxable income.