Could These Tax Deductions Save You Big?
By Alan Olsen
It’s tax time. Of course, you know that already, unless you’ve been hiding under a rock for the last several weeks. Tax time means refund time, right? Not for everyone, but in most cases, yes. But so far this year, refunds are down and many taxpayers have been caught off guard. One of the biggest factors to getting a large refund, or a refund period, is claiming every tax deduction you can possibly use.
But even deductions can’t help everyone. The new standard deduction has increased to $24,000 for married couples filing jointly and to $12,000 for single filers. Because of that, most people won’t itemize their deductions this year. That being said, there are some deductions you can claim even if you don’t itemize.
Don’t Forget Your Student Loans
For example, do you have student loans? You can claim your student loan interest as a deduction, even if you choose the standard deduction option and skip the itemizing. You have to meet a few requirements, but if you do, this is a good way to reduce your taxable income. In fact, you can claim up to $2,500 in interest paid on qualified student loans.
However, you must be paying interest on the loan and it must be for you, a dependent child, or your spouse. You also must be legally obligated to pay off the loan and you must be making payments. One more thing to remember, the more money you make the amount of interest you can deduct begins to phase out. If you’re single it starts as soon as you begin making $60,000. The phase out income for married couples filing jointly is $125,000.
Mortgage Interest Deduction
Unfortunately, you can only deduct your mortgage interest if you itemize. So for many, this won’t be worth it. However, for those who have large mortgages, it might make itemizing worth it. It will depend on whether or not you have enough total deductions to surpass the standard deduction amounts.
Self-Employment Social Security Tax
This is another deduction you can take, whether or not you itemize. If you’re self-employed you have to pay the entire 12.4 percent tax for Social Security, instead of splitting it with an employer. That’s the bad news. The good news is you can deduct half of this amount as an income tax deduction. Depending on your total income that could equal a significant reduction on your taxable income.
Licensing Fees and Professional Dues
These deductions are no longer available for the 2018 tax year. However, if you paid any dues or fees before 2018 that you still haven’t claimed, you can claim them now. For example, any licensing fees you have to pay to stay accredited, or any dues you must pay to retain memberships or licenses, can be deducted from your 2018 taxable income. Make sure you’re employer didn’t already reimburse you for any of these fees or dues. If they have then you can’t claim them as a deduction.
At GROCO, we make sure you get credit for every deduction possible. You work hard for your money and we help you keep as much of it as legally possible.