Tax Breaks to Be Thankful For

When we think about the federal income tax, we often look at the negative aspects of it; the IRS and its ability to audit any individual taxpayer any time, our requirement to file returns every April 15, etc. However, there are actually some very nice tax breaks built into the current tax code that we can be thankful are there. These tax breaks cover many stages of life and impact (in one way or another) almost all American taxpayers. Taxe Breaks

Here are some of the best tax breaks for taxpayers to take advantage of:

The Earned Income Tax Credit: This is a refundable tax credit for low to moderate-income earners, particularly those with children. The term “refundable” means you can receive this full credit regardless of whether or not you paid that amount in to the IRS. Depending on the number of children, a working family could qualify with an income of $51,567.

The Child Tax Credit: Families that meet the income thresholds for the tax year can claim a $1000 per child refundable tax credit for each child that is under 17.

The Adoption Tax Credit: Families meeting the income thresholds could claim a credit of up to $12,970 for eligible expenses related to an adoption.

Home Mortgage Interest Deduction: Taxpayers who itemize can deduct interest on a home mortgage or home equity line of credit. They may also deduct points when a home loan closes and mortgage insurance premiums.

Tax Free Capital Gains on Home Sales: Individuals are exempt for up to $250,000 of capital gains on home sales as long as they lived in the home for at least two of the five years previous to the sale. For married couples, this exclusion doubles to $500,000.

Energy Saving Tax Credits: The federal government is offering a plethora of tax breaks for energy saving home improvements. From insulation to home heating systems, geothermal to solar panels, there are numerous ways to go green and save on your taxes.

Home Business Tax Deductions: Starting a small business can open the door to numerous tax saving opportunities. Self-employed individuals can deduct expenses such as travel, meals, entertainment, advertising, car mileage (for local travel), and a percentage of your home expenses if you have a home office.

College Tuition Credits: Those who want to better themselves through higher education can take advantage of the American Opportunity or Lifetime Learning credit for college. Up to $2500 in student loan interest may also be deducted for taxpayers that meet certain income thresholds.

There are numerous other ways to save money on your taxes and in some cases legally pay an effective tax rate of zero, which is definitely something to be thankful for. Contact BASC Expertise, your trusted Mesa accountant for information about which deductions and tax credits you may qualify for.

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