Six Common Tax Deductions to Save Money

In this society, we hear plenty about the write-offs executives of corporations make for the sake of saving money on taxes. We may even go out of our way to listen to stories people tell about their own taxes. For a great many people in this country, taxes seem to be on the low end of the learning list. We know a lot about our iPhones and laptops, but little about how to save money on taxes. Well, for personal tax breaks, the best place to start is at home.




Mortgage Interest and Property Tax Deductions

The interest on the mortgage you slave away to pay with your nine-to-five job can be deducted from your upcoming taxes. You can even deduct your property tax amount, since they do not want you to pay taxes on your tax money. In all likelihood, these itemized tax deductions may be well worth the write-off. At the end of the year, near the time you receive W-2s from employers, banks should be sending 1098 forms with the amount you spent on real estate taxes and interest listed for your convenience.

If you bought a home and this is the first tax season you have lived in the home, then you can also deduct portions of the money spent during the closing. Be sure to talk to a tax professional about your tax deductions.

Health Savings Account (HSAs)

Health Savings Accounts are popular alternatives to full-fledged health insurance policies for self-employed individuals. Since HSA money can be deducted from this year's taxes also makes this a great investment opportunity. Many HSAs have a great advantage, in that the money does not get taxed when used for health purposes in the future, either. So in this way you save on taxes more than the initial year you write off the amount you put into the fund. That's what we call a win-win situation.

Dependents Can Earn Tax Credits

Many parents have children in daycares, and some may even have need of special care facilities throughout the year. At the end of the year, the parent's can receive a tax credit up to $3,000 for expenses for one dependent during the year, and up to $6,000 for multiple dependents. There are limitations to this depending on the amount an employer offers to assist with the dependent's healthcare. The dependent must also be below the age of thirteen to qualify.

Retirement Funding

Why not stow it away for the future? When we fill up our 401(k) or IRA to their limits we can remove that amount from our earned income. What a great way to save money on taxes and also prepare for our future. Many find that putting the maximum of $5,000 into an IRA helps them alleviate current tax woes, while at the same time preparing their lives for a more comfortable retirement.

Educational Expenses Past and Present

We did not waste our time in those classrooms developing our minds for nothing. Now we can deduct the interest from those loans that helped us get through school. Also, if you currently paid for tuition, then you can deduct up to $4,000 of related expenses. Its reasons like these that make education a smart choice!

The Home Worker

Many people in recent years have taken to working at home, either part-time or full-time. The benefit, of course, being the proximity of our creature comforts, as well as the freedom to work in an environment we enjoy. What many may or may not realize is the extent to which we can deduct that home office's expenses. We may be able to deduct a portion of our mortgage, depreciation value of equipment, purchase of office equipment and supplies, as well as any repairs we may have made throughout our home office. This does not give home owners the license to deduct all household expenses. Any tax deductions should be reviewed by a tax professional before including on an upcoming tax filing.

Conclusion

Tax deductions acts as the fairness rule when governing what should have to be taxed. The government cannot rightfully expect people to pay taxes doubly or excessively. For this reason, they have allowed certain necessary expenses and others that benefit society to be stricken from the books, so to speak. And, in the end, our finances are all the better for it.