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Written by Steve Cannon for USSA News.
Key Takeaways:
- Knowing the right tax deductions and credits can result in significant savings.
- Self-employment, medical expenses, teachers’ expenses, student loans, earned income tax credits, adoption, and electric vehicles are some of the tax breaks available to eligible taxpayers.
- The deadline to file taxes this year is April 18, 2023.
Do you want to reduce your tax bill and increase your refund this year? As the tax season is fast approaching, it’s essential to understand the commonly overlooked tax deductions and credits that you may be eligible for in 2023.
Here’s a comprehensive guide to some of the most significant tax breaks available to eligible taxpayers this year.
Deductions
Self-employment
If you’re self-employed, there are several deductions that you can take advantage of, such as mileage for rideshare companies, expenses for working from home, and more.
Medical and dental expenses
You may deduct medical or dental expenses if the amount exceeds 7.5% of your adjusted gross income.
Teachers’ expenses
Teachers can deduct up to $250 on any unreimbursed expenses for classroom materials like books, supplies, and equipment.
Education
You can deduct up to $2,500 for the amount of interest you’ve paid on your student loans, among other education-related tax breaks.
Credits
Earned Income Tax Credit
One in five taxpayers overlook this credit every year, which is aimed at low- to moderate-income workers that meet multiple qualifications.
Education
Two education-related tax credits include the American Opportunity Credit and the Lifetime Learning Credit. You can check your eligibility on the IRS’s website.
Adoption
Qualified adoption expenses may make you eligible for a tax credit and an exclusion from income for employer-provided adoption assistance.
Electric vehicle owners
If you purchased a qualifying electric vehicle in 2022 or 2023, the new version of the EV tax credit maxes out at $7,500.
State Credits and Deductions
If you don’t qualify for any of the tax breaks mentioned above, don’t lose hope. Your state may offer enhanced earned income credit or other localized tax breaks that could benefit you.
FAQs
Q: When is the deadline to file taxes this year?
A: The deadline to file taxes this year is April 18, 2023.
Q: What is the maximum amount of the electric vehicle tax credit?
A: The maximum amount of the electric vehicle tax credit is $7,500 for vehicles purchased in 2022 or 2023.
Q: Can I deduct my student loan interest?
A: Yes, you can deduct up to $2,500 of the interest you’ve paid on your student loans.
Q: What are the qualifications for the earned income tax credit?
A: The earned income tax credit is aimed at low- to moderate-income workers that meet multiple qualifications set by the IRS.
In conclusion, understanding the commonly overlooked tax deductions and credits can result in significant savings. Make sure to review your eligibility and take advantage of the tax breaks that apply to you. Don’t wait until the last minute, file your taxes early, and maximize your tax savings this year.
