Tips for Reducing Your Income Taxes
Most of us want to lower our income tax bills, and, with a little bit of planning, there are ways to do so.
Here are common expenses you can itemize on your Form 1040 tax return, using Schedule A, to help reduce your income tax payments:
State and local income, sales and property taxes paid in the calendar year up to $10,000 ($5,000 if married filing separately). You can deduct property taxes and either sales taxes or income taxes paid during the year to state and local government.
Mortgage interest for a primary residence or second home, up to a limit of $750,000 for mortgages taken out after December 15, 2017. For mortgages taken out before that date, the limit is $1 million.
Charitable donations (cash and non-cash) made to qualified charitable organizations.
Medical and dental expenses that qualify as deductible and exceed 7.5% of your adjusted gross income.
Education expenses, such as tuition, fees and textbooks, up to a limit of $4,000 for individuals with an AGI of $65,000 or less ($2,000 for individuals with an AGI between $65,001 and $80,000).
Retirement contributions to a traditional IRA or certain other qualified retirement plan, up to $6,000 for those under age 50 and $7,000 for those age 50 and over.
These are just a few examples of common, itemizable federal tax deductions. Depending on your finances, taking the flat-dollar standard deduction instead of itemizing deductions may be more cost effective and straightforward.
If you wish to reduce your income tax owed to the IRS, it's important to consult with a tax professional for specific advice tailored to your individual circumstances, as eligibility for deductions can vary depending on several factors and are often updated.