Tax Deductions Cheat Sheet
Overview
Tax deductions reduce taxable income, lowering the amount of taxes owed. They can be standard or itemized, depending on eligibility and financial situation.
Standard Deduction for 2025
- Single Filers: $15,000
- Married Filing Jointly: $30,000
- Head of Household: $22,500
Common Itemized Deductions
*1. Medical & Dental Expenses*
- Deductible if expenses exceed 7.5% of adjusted gross income (AGI).
*2. State & Local Taxes (SALT)*
- Deduct up to $10,000 for state/local income, sales, and property taxes.
*3. Mortgage Interest Deduction*
- Applies to interest paid on mortgages up to $750,000.
*4. Charitable Contributions*
- Deduct donations to qualified organizations (limits apply based on AGI).
*5. Student Loan Interest Deduction*
- Up to $2,500 deduction for eligible student loan interest payments.
*6. Retirement Contributions*
- Traditional IRA contributions may be deductible (income limits apply).
*7. Home Office Deduction*
- Available for self-employed individuals using part of their home for business.
*8. Business Expenses*
- Deductible expenses include travel, equipment, and professional fees.
Tax Planning Strategies
- Maximize Deductions: Track eligible expenses throughout the year.
- Consider Itemizing: If deductions exceed the standard amount, itemizing may be beneficial.
- Stay Updated on IRS Changes: Deduction limits and eligibility may change annually.
Tools & Resources
- IRS tax calculators for estimating deductions.
- Tax planning software for optimizing deductions.
- Financial advisors for personalized tax strategies.