There’s no need to feel overwhelmed by tax season. In fact, when it comes to filing, there may be some great money-savers that aren’t on your radar but should be. Understanding what a tax deduction is and how it can lower your tax bill or increase your return can be the “make-or-break” difference to putting more green back in your pocket.
Suffolk Federal is offering the members of its 10 convenient Long Island area locations advice and services to soundly make it through tax season, long before the April 15 filing deadline. Suffolk County’s leading financial institution is also reminding members that taxable income can be lowered by factoring in smart deductions. When the amount of the tax deduction is subtracted from one’s income, the overall taxable income is reduced, equating to a lower tax bill.
“Our goal is to educate our members and ensure they have the tools to deal with what many consider an otherwise complicated subject,” said Ralph D. Spencer, Jr., President and Chief Executive Officer of Suffolk Federal. “We have found that many of our members might not be aware or may overlook itemized deductions, not understanding exactly how they can be utilized.”
With a flat, standard deduction, the amount is determined based on filing status. Meanwhile, with an itemized deduction, taxable income is based on any of hundreds of available deductions. Here are some deductions you might not know exist for the 2019 tax year:
- Mortgage Interest: You are paying the interest so why not get the deduction? The rule here is if you obtained a mortgage prior to 12/15/2017, you can deduct the interest on a mortgage up to $1 million and if you obtained your mortgage after that date, you can deduct the interest on a mortgage up to $750,000.
- Student Loan Interest: Up to $2,500 can be deducted from your taxable income if interest was paid on student loans last year. According to TurboTax®, a student who’s not claimed as a dependent can qualify to deduct up to $2,500 of student loan interested paid by you or someone else.
- Charitable Contributions or Gifts: Whether it’s cash or property through donations or fundraisers, save the receipts for possible deductions and auditing.
- Medical Expenses: Qualified, unreimbursed medical expenses totaling over 7.5% of your adjusted gross income for the tax year can be deducted.
- Home Office Deduction: If you are self-employed and have a dedicated office in your home where you conduct your business, then you may be eligible for a home office deduction. You will have two options on how you can calculate your deduction:
- Option 1: $5 per square foot of office space with a maximum of 300 square feet or $1,500.
- Option 2: Use the total of direct and indirect expenses. Direct expenses are deducted in full while indirect is deducted proportionately based on the size of your home office in relation to the size of the home.
- Residential Energy Credits: Here is a great incentive to “Go Green.” Different qualified improvements you make, focused on creating an energy-efficient home, can carry various opportunities to earn the tax credits.
- Deduction of Medicare Premiums for those Self Employed: There is a deduction for the entrepreneur who qualifies for Medicare Part B and D premiums including the cost of a supplemental Medicare policy or Medicare Advantage. Check with your tax advisor to determine how this is calculated.