Home Business Tax Deduction Tips for those Who Want to Save This Year

Tax Deduction Tips for those Who Want to Save This Year

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Every working person should have the appropriate tax planning in place every year to avoid leaving money on the table or to get in trouble with the IRS. And if you don’t plan your tax deduction wisely, it could eat into your take-home pay and affect your financial obligations. Let’s look at some of the tax deduction tips you may have overlooked in the past.

Charitable Contributions

It is difficult to ignore large charitable contributions made during the tax year by payroll deduction or by a check sent. You will definitely notice them in your bank statement or paycheck. And, you shouldn’t overlook charitable contributions; no matter who small because they do add up over time. More importantly, by the end of the year, you could have enough money to write off on your tax returns.

Non-Profit Organization

You would be surprised to know that cash is not the only thing you can write off, but anything you give to a non-profit organization is up for grabs such as ingredients or food to a soup kitchen, cost to buy stamps for school fundraisers, driving your car to a charity event. Don’t leave anything out.

Student Loans

Yes, the interest paid on student loans is deductible and can give you tax break savings. However, in order to receive a deduction, you have to be liable for the loan; even if someone else is paying for the loan and not you. The IRS sees it as the debt being paid; no matter who is paying for it. Therefore, even if you are not paying for the loan, you should also claim for the loan as long as you do not claim to be a dependent on anyone’s tax return. You would qualify for $2,500 in student loan interest.

Moving Expenses

If you are relocating due to a job transfer, you can claim for the expenses of moving on your tax return. Yes, it would be an itemized deduction, especially if you are moving more than fifty miles away. In 2018, you were allowed to deduct $0.23 for each mile you drive getting your personal belongings to the new location. However, you have to check on the states because some laws change every year. The state of California, for example, continues to offer this benefit.

Medical Expenses

If you are taking care of any parent, you can claim medical expenses as tax deductions. This is especially true, if your parents have no health insurance. This would be a major tax deduction, if you have out of pocket cost for their medical issues. However, you must have proof you paid the medical bills for your parents.

Does A Personal Loan Affect Tax Return?

Upon receiving a personal loan, it would not be considered to be taxable income. The lender is the one who is obligated to pay tax on the loan. However, if you think a personal loan affects tax return, you are right. It is tax-deductible if it is for an investment, is a business expense or educational expense.

Interest Payments

The interest payments made on certain loans are tax deductible and these include:

  • Home Equity Loans
  • Student Loans
  • Business Loans

Are Cash Advance Loans Online Deductible?

Cash advances loans online should not be considered as loans because they are not. Instead, they are considered to be advanced payments. Therefore, you don’t have to report a cash advance that you have received. These are exempt from being taxable. In many cases, the cash advance goes on automated withdrawal from your paycheck or bank account; whether weekly or monthly.

Tax Day

Taxable Funds

At the time the funds are made available, they are not subject to being taxed because it is not considered a loan. However, if you used this money as an investment and you earned income from such, then it is taxable. The fees associated with a cash advance would be deductible. You would treat it as an expense.

Conclusion

Now that you have these tax deduction tips, it is time to know how to use them so that you can save this year. Be sure to speak to a professional to get more insight, understanding and knowledge.

Read More:

ITR Forms: Eligibility criteria, which tax return to file

How to file GST Return Online: Step-by-step guide

How to file GST Return Online: Step-by-step guide

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