Self-employed individuals can claim office supplies on their taxes. This includes printer ink, paper, pens and pencils and other everyday supplies that are used for business purposes. Individuals that work for an employer are not eligible for this type of deductions. Instead, you should be able to seek reimbursement from your employer for out-of-pocket expenditures for office supplies.
There are many disruptions that can slow down your tax refund, creating a significant delay in the time that it takes to receive your money from the IRS. Filing your tax return as son as possible will get you toward the front of the line as refunds are processed in the order that returns are received. E-filing will reduce the time that it takes the IRS to receive and process your tax return, eliminating delays caused by the mail.
The American Opportunity Tax Credit (AOTC) allows a maximum $2,500 per child per year for those paying for an undergraduate tuition. This credit can only be used for qualifying expenses that are not being paid with a 529 distribution. The Lifetime Learning Credit offers a maximum credit of up to $2,000. The Lifetime Learning Credit is not restricted to undergraduate study and can be used in graduate programs as well.
A rental property can offer a steady income for the landlord. In addition to the monthly rent, these types of properties come with many tax deductions that can save you money. Mortgage interest, property taxes and any repairs are all tax deductible. There are plenty of less obvious deductions including milage associated with the rental, insurance, utilities and loss of income when the rental is vacant.
Filing before you have all your tax documentation is a common mistake. Without this necessary paperwork finalized, some of the numbers in your tax return may not be accurate. The 2021 Child Tax Credit statements were mailed at the beginning of the year to families that received this money. If the money on this statement and that reported on your tax return are not in sync, this will require a manual review by the IRS. Math errors in your tax return can be a red flag for an audit. It is important to make sure that your calculations and figures are correct prior to filing.
The IRS has stated that COVID-19 home testing kits can be considered a medical expense under the tax code. Personal protective equipment (PPE) that is used primarily for preventing the spread of COVID-19 also falls under this tax code. This includes masks, hand sanitizer and sanitizing wipes. However, to be eligible for deducting these items on your taxes the total for all medical and dental expenses must exceed 7.5% of your adjusted gross income.
When investing in real estate properties, you can deduct the money paid in property taxes, property insurance and mortgage interest on your taxes. Money that goes to improve or repair a rental property can be deducted from your taxes as well. This will greatly reduce the taxable income that you make from your rental property, making this a more lucrative investment.
Child tax credit payments began over the summer and will continue through the year for qualifying families. When you go to file your 2021 taxes, you will only be eligible for half of the normal child care credit because the other half was already received throughout the second half of 2021. Since the deduction is based off of your 2020 income, a significant increase in your income may leave you owing some of the money back to the IRS if it exceeds the thresholds set.
The interest paid on a mortgage is tax-deductible. When you pay off your mortgage, you will no longer be paying interest and will lose this tax deduction. This will make your taxes go up as a result of eliminating this mortgage interest deduction. Similarly, as you continue to pay your mortgage down over the years the amount of interest paid annually, and the tax deduction that goes along with it, will be reduced.
A 529 is a great way to save for education expenses. Withdrawals are tax-free when used on qualified education expenses. However, if the money is withdrawn for non-qualified expenses or if there is money left over to be withdrawn after all expenses are paid this is considered taxable income. In addition to paying taxes on the leftover amount, you will also incur a 10% penalty for these withdrawals.