Updated Feb 2nd, 2020
Which expenses are deductible and/or gets a tax credit in my personal tax return?
This is NOT tax advice! please refer to your CPA/EA for a specific list that pertains to you, based on overall income tax brackets and deductibility
- Foreign Income Exclusions: due to tax treaty or bona fide residence in a foreign country
- Carry-over Net Operating Losses: if you had NOLs in previous years and ELECTED not to carry it back, you may be able to carry it forward to reduce this year’s taxable income
- Capital Losses: if you have capital losses or previously suspended capital losses, you may deduct up to $3,000 in most cases
- Health-Savings Accounts: if you contribute to an HSA account and use those funds for medical expenses, they may be deductible
- Self-Employed Health Insurance: if your income comes from Schedule C (Self Employed or Sole Proprietors) or through entities such as Corporations or LLC/Partnerships; the health insurance premiums may be deductible
- Student Loan Interest deduction: all or a portion of the interest paid related to a student loan may be deductible
- IRA Deduction: if you contribute to a Traditional IRA, you may be able to deduct up to $6,500 (depending on age and income levels)
- Educator Expenses: public school teachers can deduct up to $250 per year for unreimbursed expenses made relevant to education activities.
- Tuition and Education Credits: from colleges and universities, in some cases vocational schools as well, may be deductible
- Foreign Tax Credit: you may get a credit on foreign taxes paid on foreign earned income
- Child and Dependent Care: you may get a tax credit for a portion of after school activities and adult dependent care expenses
- Child Tax Credit and Dependent Credit: You may be able to get a credit for each child you have as a dependent. A smaller credit for non-child dependent
- Alimony Paid: is deductible in 2018 (but no longer in 2019). Child support is not.
- Additional Child Tax Credits, Earned Income Credit, Net Premium Tax Credit: mostly for low income households with you dependents. This one is hard to explains, there are all sorts of circulating formulas around these credits
- Standard Deduction: $12,000 for Single and $24,000 for married filing separately; however if these happen to be lower than the standard deduction, these are the typical Itemized deductions for Schedule A:
-Medical Expenses: all medically necessary costs above 7.5% of your income while itemizing
-State and Local Taxes: Real Estate Taxes for Principal Residence , State Income Tax, Sales Tax, and other local taxes. Limited to $10,000 overall in total when itemizing
-Home Mortgage Interest: (up to $750,000 debt) when itemizing
-Gifts to Charity: all documented gifts to charity (up to 50% of income) may be deductible when itemizing
-Gambling Losses: tot he extend of gabling earnings, you can deduct them to reduce the taxable gambling winnings when itemizing
*NOTE: this is is NOT related to business expenses, for those read this article
-Hector Garcia, CPA
If you would like to hire my as your “CPA / Tax Preparers”, email me: hector@garciacpa.com or call my office to make an appointment: 954-414-1524
