(909) 946-1000When tax season rolls around, understanding tax deductions can make a big difference in how much you owe or how much you get back in your refund. Unfortunately, many taxpayers either miss out on valuable deductions or claim ones they shouldn’t, leading to issues with the IRS.
At Kerstra Tax in Upland, CA, we help clients maximize their deductions while staying compliant with tax laws. In this post, we’ll break down what you can and can’t write off, so you can avoid mistakes and make the most of your tax return.
What Is a Tax Deduction?
A tax deduction reduces your taxable income, which in turn lowers the amount of tax you owe. Deductions can come from various expenses, and knowing which ones you qualify for is key to minimizing your tax liability.
Common Tax Deductions You CAN Write Off
Here are some of the most common and valuable deductions you should be aware of:
1. Mortgage Interest
If you own a home and have a mortgage, you can deduct the interest paid on your loan. This is one of the most substantial deductions available to homeowners.
2. State and Local Taxes (SALT)
You can deduct up to $10,000 in state and local taxes, which includes property taxes, state income taxes, and sales taxes.
3. Charitable Contributions
Donations to qualifying charitable organizations are deductible. Be sure to keep proper documentation, as you’ll need receipts for any contributions over $250.
4. Medical Expenses
If your medical and dental expenses exceed 7.5% of your adjusted gross income, you can deduct the excess. This includes doctor visits, surgeries, prescriptions, and even some travel expenses related to medical care.
5. Retirement Contributions
Contributing to tax-advantaged retirement accounts like an IRA or 401(k) can reduce your taxable income. For 2024, you can deduct contributions up to $6,500 (or $7,500 if you’re 50 or older) to a traditional IRA.
6. Education Expenses
Certain education-related expenses, like tuition, fees, and student loan interest, may be deductible. Additionally, if you’re eligible for the Lifetime Learning Credit or American Opportunity Credit, you can save even more.
7. Business Expenses (for the Self-Employed)
Self-employed individuals can deduct a variety of business-related expenses, including office supplies, travel expenses, and home office deductions. Be cautious, though, as the IRS has strict guidelines for what qualifies as a valid business expense.
What You CAN’T Write Off
While there are many legitimate deductions available, there are also plenty of expenses that don’t qualify. Here are some commonly misunderstood deductions:
1. Personal Expenses
Any personal expenses that are not directly related to generating income typically can’t be deducted. This includes things like personal groceries, clothing (unless it’s for specific work-related requirements), and routine living expenses.
2. Commuting Costs
While you can deduct certain travel expenses related to business, the cost of commuting to and from work is generally not deductible.
3. Political Contributions
Donations to political campaigns or political organizations are not tax-deductible, regardless of the amount.
4. Personal Vacations
Even if you discuss business while on vacation, personal travel expenses cannot be written off. Only legitimate business travel can be deducted, and it must be substantiated with documentation.
5. Gym Memberships
While health-related deductions exist for medical expenses, gym memberships and fitness programs are not typically deductible unless specifically prescribed by a doctor for a medical condition.
How Kerstra Tax Can Help Maximize Your Deductions
Navigating which deductions you can and can’t claim can be challenging, especially with constantly changing tax laws. That’s where the team at Kerstra Tax in Upland, CA comes in. We specialize in helping individuals and businesses identify every eligible deduction while staying compliant with IRS regulations.
With our expert tax preparation services, we’ll ensure you’re not leaving money on the table or claiming deductions that could raise red flags.
Need Help with Your Tax Deductions? Contact Kerstra Tax Today!
Whether you’re filing personal or business taxes, understanding deductions is crucial for minimizing your tax burden. Let the professionals at Kerstra Tax handle your tax preparation to maximize your refund and avoid costly mistakes.
Call us today at 909-946-1000 or visit our website at kerkstratax.com to schedule a consultation with our experienced tax professionals.
