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Tag: tax deductions

Business Owner in Litchfield, NH Strategizes to Maximize Her Tax Deductions

There are some tax advantages to hiring your spouse to do work for your family business. You will not have to pay FUTA (Federal Unemployment Tax), which is set at 6.0%. Family based businesses are also exempt from withholding FICA (Federal Insurance Contributions Act). In order to take advantage of this tax savings, your spouse needs to contribute to the business for a compensation, making them a legitimate employee. This allows you to convert higher-taxed income from your business profit into lower-taxed income, creating significant savings.

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Amherst, NH Resident Has Questions

The standard deduction for 2023 is $13,850 for single filers and $27,700 for married couples filing jointly. If other eligible deductions exceed this amount, then you will want to itemize your deductions instead. These include mortgage interest, unreimbursed medical expenses exceeding 7.5% of your income, charitable contributions, property taxes, and state or local income tax. To determine whether you should use the standard or itemized deductions, you will first need to have an idea of how many deductions you will have and which offers the greatest amount of savings.

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Who Is Exempt from Paying Taxes?

Milford, NH Resident Asks an Important Question

There are some groups that are exempt from paying taxes. These include qualified 501(c)3 non-profit organizations, US citizens working abroad, and some low-income individuals. While most of us will have to pay some amount in taxes throughout the year, there are some circumstances when no taxes will be owed. For those with low or no income, lots of deductions, or many dependents taking advantage of the Earned Income Tax, you may wind up with no tax bill for the year.

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Nashua, NH Student Looks for Student Tax Breaks

The IRS offers several tax breaks for college students, as well as graduates who are paying off student loans. The American Opportunity Tax Credit (AOTC) is available for those enrolled in their first four years of college courses. Taxpayers paying for college, either the student themselves, a parent, or spouse, can claim a tax credit of 100% on the first $2,000 spent on eligible education expenses. The Lifetime Learning Credit is another advantage for current students. This differs from the AOTC in that graduate students can be eligible, and you are not required to be enrolled for at least half of the year. Those that have student loans, whether current or former students, can deduct the interest paid on the student loans from their taxes.

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Amherst, NH Resident Seeks Information

If you are the caregiver for your elderly parent, you may be eligible for tax deductions. The first tax credit that you may be able to utilize is the child and dependent care tax credit. If you are paying for care for your elderly parent while you are working, these expenses may be eligible. You can claim up to $3,000 for one person or $6,000 for two. A second tax credit is available for other dependents, with up to $500 in tax credits. To be eligible for this the parent must be a US citizen with a gross income that is not greater than $4,400 and have lived with you more than 50% of the year.

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What Are Above-the-Line Tax Deductions?

Hudson, NH Resident Seeks Clarification

Above-the-line tax deductions are those qualified items that are deducted from gross income to
calculate adjusted gross income. The most common above-the-line deductions include IRA and other
qualified retirement contributions, healthcare expenses, business expenses, and student loan interest.
Above-the-line deductions can be taken even if you are not itemizing deductions when filing taxes. This
allows those who have more advantage taking the standard deduction versus itemizing to still take
advantage of these above-the-line tax savings. To calculate this, all above-the-line deductions are
combined and are then used to determine your adjusted gross income, reducing overall taxable income.
This is separate from the standard deduction or itemized deductions, which can then be taken from the
adjusted gross income.

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Tax Benefits for Real Estate Investors

Hollis, NH Potential Investor Looks for Tax Advice

Real estate is a great way to diversify your investments, generating a steady flow of passive income.
There are also many tax benefits to real estate investing, including writing off maintenance expenses
done on the property, property taxes, insurance, mortgage interest, and even property management
fees. These deductions can significantly reduce the taxable income generated from rental properties.
You are also able to take advantage of depreciation. This can be deducted each year, taking into
consideration how much the property is worth, the time period, and a designated depreciation method
that will be used.

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What are the Tax Benefits of Owning a Home?

Amherst, NH Homeowners Looks for Future Tax Advantages

There are many tax advantages for homeowners, particularly when itemizing your taxes. If you have a mortgage on your home the interest paid each year can be deducted from your taxable income. This is only available if you are itemizing your taxes, as opposed to taking the standard deduction. If you have a home equity loan, this interest can also be deducted when filing your taxes. For those self-employed individuals, the space in the home used for business purposes can be deducted including heat, utilities, and insurance, saving you money on your overall tax bill.

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How Can You Get Your Tax Refund Quickly?

Nashua, NH Resident Looks for a Fast Turnaround on His Return

One of the best ways to make sure you get your tax refund as quickly as possible is to file your return electronically.  This eliminates the time during transit, getting your tax return at the front of the line.  There is a significant backlog for paper returns and yours is unlikely to be prioritized.  You should also request a direct deposit for your refund, instead of waiting for a check to be mailed. 

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Brookline, NH Resident Looks for Answers

For those who are self-employed, health insurance premiums paid throughout the year can be deducted on their taxes.  Even if you do not item deductions on Schedule A, these health insurance premiums can still be deducted on your tax return.  For W-2 employees you can deduct out-of-pocket medical expenses and health insurance premiums only if you take the itemized deduction on your tax return.  Employees looking to take this deduction can only do so if these premiums and other medical expenses when the amount exceeds 7.5% of your Adjusted Gross Income.

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