What are tax write-offs?
Tax write-offs lower the amount of income you’re taxed on — leading to a smaller tax bill. (Take a look at our help center article, “Save Money on Your Taxes,” to learn more about write-offs).
Types of write-offs
- Business: Ordinary and necessary work-related purchases
💡 Ordinary and necessary - ‘Ordinary' means it's common in your field. 'Necessary'
means it's 'helpful and appropriate' for doing your work — it doesn't necessarily
have to be indispensable.
- Student loan interest
- Teacher educational expenses
- Medical or dental expenses more than 7.5% of your AGI
- Health savings account (HSA)
- Sale of home
- Individual retirement arrangements (IRAs)
- Capital losses
- Bad debt
- Opportunity zones
- Debt forgiven on my residence due to foreclosure, repossession, abandonment or because of a loan modification or short sale
- Deductible non-business taxes
- Personal property tax
- Real estate tax
- Sales tax
- Charitable contributions
- Gambling loss
- Miscellaneous expenses
- Interest expense
- Home mortgage interest
- Moving expenses
- Standard deduction
- Itemized deductions
What are tax breaks?
Tax breaks or credits reduce the amount of tax you owe — or increase your tax refund — dollar for dollar. Certain credits may give you a refund even if you don't owe any tax.
The types of credits
- Family and Dependent Credits:
- Child Tax Credit
- Dependent Care Credit
- Adoption Credit
- Income and Savings Credits:
- Earned Income Tax Credit
- Saver's Credit (Retirement Savings Contributions Credit)
- Foreign Tax Credit
- Excess Social Security and RRTA tax withheld
- Credit for Tax on Undistributed Capital Gain
- Credit for Prior Year Minimum Tax
- Homeowner Credits
- Electric Vehicle Credits
- Healthcare Credits:
- Premium Tax Credit
- Education Credits:
- American Opportunity Credit and Lifetime Learning Credit
You can learn more about write-offs and credits in this article https://www.irs.gov/credits-and-deductions
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