Tax Deductions and Credits FAQ

To claim the home mortgage interest deduction, you must itemize your deductions on Schedule A (Form 1040) and the mortgage must be secured by your main or second home. There are also limits on the amount of mortgage debt that qualifies for the deduction.

Yes, certain childcare expenses may be eligible for the Child and Dependent Care Credit. This credit can help offset the costs of childcare while you work or look for work.

There are several education-related tax benefits, such as the American Opportunity Credit and the Lifetime Learning Credit, which can help offset the cost of higher education for yourself, your spouse, or your dependents.

Business-related deductions can include expenses such as office supplies, travel, advertising, and utilities. It’s important to keep detailed records and ensure that the expenses are ordinary and necessary for your business.

Self-employed individuals may be able to deduct the cost of health insurance premiums for themselves, their spouses, and their dependents. This deduction is taken on Form 1040, Schedule 1.

Yes, donations to qualified charitable organizations are generally tax deductible if you itemize your deductions. It’s important to keep records of your donations, including receipts and acknowledgments from the charities.

The deduction for moving expenses is no longer available for most taxpayers, except for members of the Armed Forces on active duty who move due to a military order.

The EITC is a refundable tax credit for low to moderate-income working individuals and families. The credit can provide a substantial financial benefit for those who qualify.

Self-employed individuals and independent contractors may be able to deduct expenses related to a home office, such as a portion of mortgage interest, utilities, and home maintenance costs.

You can deduct qualified medical expenses that exceed 7.5% of your adjusted gross income (AGI) if you itemize your deductions. This can include expenses such as doctor’s visits, prescription medications, and certain long-term care services.

Business owners and self-employed individuals can deduct the cost of operating a vehicle for business purposes using either the standard mileage rate or actual expenses method.

The Child Tax Credit is a credit that can reduce your federal income tax by up to $2,000 for each qualifying child under the age of 17. The credit is partially refundable, meaning you may receive a refund even if you don’t owe any tax.

You can deduct state and local income taxes, or state and local sales taxes, but not both. Additionally, there are limits on the total amount of state and local taxes that can be deducted.

Qualified adoption expenses, such as adoption fees, court costs, attorney fees, and travel expenses, may be eligible for a tax credit. The credit is nonrefundable, but any unused credit can be carried forward for up to five years.

If the training or professional development is related to your current job or business, you may be able to deduct the expenses, including tuition, books, and travel costs.

The Lifetime Learning Credit is a tax credit for qualified tuition and related expenses paid for eligible students enrolled in an eligible educational institution. It can provide a tax credit of up to $2,000 per tax return.

Investment-related expenses, such as investment advisory fees, custodial fees, and certain legal fees, may be deductible as miscellaneous itemized deductions subject to the 2% AGI limit.

Also known as the Saver’s Credit, this credit is designed to help low to moderate-income individuals save for retirement. It provides a tax credit of up to $1,000 for contributions to retirement savings plans.

Form 1099-MISC is used to report miscellaneous income, such as payments to independent contractors, freelance workers, or rental income. Recipients should receive Form 1099-MISC by January 31st.

The rules for deducting business meals and entertainment expenses have changed in recent years. Generally, only 50% of the cost of business meals is deductible, and entertainment expenses are no longer deductible.

Gambling losses are deductible, but only to the extent of gambling winnings. You must keep accurate records of your gambling activities to support your deductions.

Certain energy-efficient home improvements, such as solar panels, geothermal heat pumps, and energy-efficient windows, may be eligible for tax credits under the Residential Energy Efficient Property Credit.

The Foreign Tax Credit is a non-refundable tax credit for income taxes paid to a foreign country. It is designed to reduce the double taxation that can occur when income is taxed by both the United States and a foreign country.

Business-related travel expenses, including airfare, lodging, and meals, may be deductible if the travel is ordinary and necessary for your business.

Legal fees related to producing or collecting taxable income, or for the management, conservation, or maintenance of income-producing property, may be deductible as miscellaneous itemized deductions subject to the 2% AGI limit.

If you make home improvements for medical reasons, such as adding wheelchair ramps or modifying bathrooms, the costs may be deductible as medical expenses if they exceed 7.5% of your AGI.

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire individuals from certain target groups, such as veterans, ex-felons, and individuals receiving certain forms of public assistance.

If the education maintains or improves skills required in your present work, it may be deductible. However, education expenses that qualify you for a new trade or business are not deductible.

Alimony payments made under a divorce or separation agreement executed before December 31, 2018, may be deductible by the payer and taxable to the recipient. However, for agreements executed after that date, alimony is no longer deductible.

The cost of professional journals, trade publications, and business-related memberships and subscriptions may be deductible if they are directly related to your business or profession and are ordinary and necessary.