Understanding Common Tax Deductions and Credit
<p></p> <p></p> <img src="https://diamondcertified.org/img/blog/tax-services-feb-25.webp" alt="undefined" style="height: ;width: "/> <p></p> <p>Tax deductions and credits can help you reduce your overall tax liability and potentially increase your refunds. Here’s some basic information to keep in mind: </p> <h3><strong>Tax Deductions</strong></h3> <p>Tax deductions reduce your taxable income, lowering the amount of income subject to taxation. Common tax deductions include: </p> <p><strong>Mortgage interest<br></strong>Homeowners can deduct interest paid on their mortgage loans, helping reduce taxable income. </p> <p><strong>Student loan interest<br></strong>If you’re paying student loans, you can deduct interest paid (up to a certain limit). </p> <p><strong>Medical expenses<br></strong>Qualified medical expenses exceeding a specific percentage of your adjusted gross income (AGI) may be deductible. </p> <p><strong>Charitable contributions<br></strong>Donations to qualified charities can be deducted, but be sure to keep records of all donations. </p> <p><strong>State and local taxes<br></strong>You may be able to deduct state and local property, income, and sales taxes (subject to a cap). </p> <h3><strong>Tax Credits</strong></h3> <p>Tax credits directly reduce your tax bill on a dollar-for-dollar basis, making them even more valuable than deductions. Popular tax credits include: </p> <p><strong>Child tax credit<br></strong>Provides a credit for each qualifying child under the age of 17. </p> <p><strong>Earned income tax credit (EITC)<br></strong>Designed for low-to-moderate-income taxpayers, the EITC can provide significant refunds. </p> <p><strong>American opportunity credit<br></strong>Helps cover education expenses for the first four years of higher education. </p> <p><strong>Lifetime learning credit<br></strong>Offers a credit for qualified tuition and related expenses for higher education without time limits. </p> <p><strong>Standard Deduction vs. Itemizing<br></strong>The standard deduction amount varies by filing status and changes annually. Itemizing makes sense if your eligible expenses exceed the standard deduction amount.</p> <p><a href="https://www.diamondcertified.org/" target="_self">Use Diamond Certified Resource to find top rated companies.</a> </p> <p><strong>Related Articles</strong><br><a href="https://www.diamondcertified.org/Guide/Tax-Services/" target="_self">The Essential Guide to Tax Services</a><br><a href="https://www.diamondcertified.org/find-expert-advice/" target="_self">Get Expert Advice From Owners of Top Rated Local Companies</a><br><a href="https://www.diamondcertified.org/membership/" target="_self">Become a Diamond Certified Preferred Member (Always Free)</a> <a href="https://www.diamondcertified.org/find-top-rated-companies/hub/ca/san-francisco-bay-area/" target="_self">Find Top Rated Companies in the San Francisco Bay Area</a> </p>
