Are YOU paying more back in taxes than what you should? You’re not alone.
It’s okay. You don’t know what you don’t know, so you simply file your taxes and pay back what you owe like every other good, law-abiding citizen.
But what if I told you that there are numerous ways to save more on taxes?
A lot of deductions that you can claim.
In this post, we are going to cover 6 ways for you to save more on taxes so that you can only pay back what you actually owe.
As always, you should consult with your CPA or whoever is in charge of your taxesbefore making any financial decisions.
With that said, let’s dive right in.
1. Charity Tax Deduction
If you donate to charity, whether your donations are in cash or have a cash value (like clothes or food), you might be able to deduct those donations.
Whenever I donate clothes, I get a receipt back from the organization I donated to stating how much the clothing that I donated is worth. Then I take that to my CPA who then proceeds with my deduction.
The same happens whenever I donate cash to charities that I support and firmly believe in.
This page by the IRS explains what counts as a deductible donation and which organizations actually qualify, which usually are non-profits.
You might think that you have nothing to donate, and that is simply wrong.
You might have a lot of clothing laying around that you no longer use, so why not donate it to someone who needs it AND claim that tax deduction?
2. Home Office Deduction
If you have a business that you run from your home, whether it is a house, condo, apartment, etc, you might qualify for a home office deduction.
To qualify for this deduction, as mentioned by the IRS, you MUST be doing business from your home, and deductions are $5 per square foot for a maximum of 300 square feet, which is a maximum of $1,500.
You need to figure out what percentage of your home you use to conduct your business and do the math.
Also, if you are an employee who works from home, you do not quality.
3. Hiring an Accountant
Hear me out. If you are still filing your own taxes, you could be missing out on a lot of helpful tax deductions.
As I mentioned in the beginning of this post, you don’t know what you don’t know, and these accountants are very knowledgeable about the tax codes so that they can be able to help you save so much more in taxes.
Do your research and make sure that you are filing with an expert that has a lot of experience and positive feedback.
4. Education Credit
You may qualify for an education credit if you are enrolled in a higher-education program (everything afterHigh School).
This credit will help you reduce the amount of tax you owe, and as mentioned by the IRS, if that credit reduces your amount owed to less than zero, you might receive a refund.
Now, there are several requirements that must be met to qualify for the education credit, but here is a little snapshot of what the IRS has listed:
5. Solar Tax Credit
With so many people adding solar panel to their homes to save the planet and save on energy costs, this one is a no-brainer.
Did you know that you can deduct 26% of the cost of installing a solar energy system from your taxes?
The 26% deduction will decrease throughout the years, so if you’re still considering it, this is your sign.
6. Internet & Phone Bills
If you are self-employed, you can deduct the business portion of your internet and phone bill.
However, you can ONLY deduct the portion that is linked directly with your business. This means that if you run your business from home and use the same internet for both personal and business purposes, you can only deduct the business side.
Also, if you use your phone for your business, you cannot deduct 100% of that expense UNLESS you have another line strictly for business.
It’s a Wrap!
There are A LOT more ways you can save more on taxes each year, so you should always consult your CPA whenever you have to file your taxes to make sure you are taking advantage of all of the deductions you are entitled to.
As a bonus, here is something for my self-employed people: you can deduct up to $5,000 in startup costs in its first year, and if you incorporate your business (create an LLC, etc.), you can deduct up to $5,000 more in organizational costs.
Let me know below if this post helped you, and PLEASE share this with whomever can benefit from this knowledge.