What Can be Deducted on Federal Income Taxes

Every year, taxpayers either look forward to April 15 or hope to avoid it. The fear or excitement is usually tied to whether a refund is coming or a check has to be written to the IRS. If you’re looking to get a refund, there are a number of tax deductions that you can take advantage of. If you have to pay the IRS, it might be time to check with a firm like OC Tax Relief. Here are some deductions that you should take advantage of. 

Child Tax Credit

One of the easiest ways to save money on your taxes is by having children. While having a few kids will cost money, it won’t likely be because your taxes are higher. There is a $2,000 credit per child until the age of 16. Five children would be a credit of $10,000. Keep in mind that this is not a deduction on your adjusted gross income. It’s a credit against the tax you owe. This credit is also refundable up to $1,400, which means that you can get this amount back per child even if you had no income in the previous year. 

Standard Deduction

Every taxpayer gets at least the standard deduction. It’s $12,000 for single folks, $18,000 for heads of household and $24,000 for married couples as of the 2018 tax year. This amount will adjust annually based upon inflation. This means that you can make up to the limit in taxable income and owe absolutely nothing. 

Mortgage Interest Deduction

If you own a home, it’s possible to deduct some of the interest that you have to pay from your taxable income. The total of your deductions would have to exceed the amount of the standard deduction. You can deduct your mortgage interest up to the first $750,000 borrowed. 

Charitable Deductions

Any giving to a 501(c)3 charitable organization or a qualified religious group is deductible from your taxable income. This is a great way to cut the amount of tax that you have to pay. The idea behind this deduction is the argument that charitable organizations provide benefits to society that would otherwise had to be carried out by government. If you’d like to help others and pay less in taxes, this is a good deduction to take advantage of. 

There are many deductions, but some people will have to pay quite a bit because of high self-employment income. Assistance from an organization like OC Tax Relief could help if you’ve fallen behind in payments. Regardless, April 15 will come around, and you’ll need to be ready by taking advantage of as many deductions as possible.