Understanding Tax Deductions: What You Can and Can’t Claim

Taxes may be stressful. You’re sorting through receipts to see what you can claim. Fear not—you’re not alone. Let’s simplify tax deductions.

What’s a Tax Deduction Anyway?

Tax deductions reduce your tax bill. This amount can reduce your taxable income. The less you owe, the happier you are, right?

Common Deductions

These common expenses may save you money:

1. Medical Expenses: Significant medical expenses hurt. Some of those expenses may be deductible. All out of pocket medical, dental, vision, chiropractor, acupuncture & medical miles may be deductible. Additionally, if you’ve had to make changes to your home to accommodate medical changes or challenges that can be deductible too.

2. Charitable Donations: Donating to your favorite charity is a good deed and a tax break. Just save receipts!

3. Education Costs Going back to school, or have a child attending college? Some of those expenses like tuition, books and college fees may be deductible.And, don’t forget Student Loan Interest is a separate deduction claimable on your tax return.

4. Home Office: If you have a dedicated office space for your business you may be able to deduct a portion of the expenses like your rent, mortgage interest, property taxes and utilities. However, your workspace must be a dedicated area, not your kitchen table.

What you can’t claim

While reducing your tax payment is excellent, not everything is deductible. Some frequent misconceptions:

• Commuting Costs: Transportation to and from work is rarely deductible. Sorry!

• Personal Living Expenses: Groceries, entertainment, and clothing are personal costs, not deductible.

Keeping Good Records

The golden rule of tax deductions is good records. Keep receipts, invoices, and other deduction-related information. It will save you a lot of trouble during tax season.

Remember: Tax rules change, so stay current. Ask a tax professional for specific advice. Understanding tax deductions and keeping solid records helps lower your tax bill.