It’s always a good idea to be aware of the tax deductions and write-offs that you legally qualify for. While most people tend to worry about their taxes at the beginning of February, being prepared beforehand is a good idea. April might appear to be far away but if you have everything in order, you can make the process stress-free for yourself and make sure that you save money as well.
Now, if you’re wondering what tax deductions you can qualify for, the following is a list of expenses that you should take into considerations for San Diego tax preparation.
- 1 Dental and Medical Bills
- 2 Fees for Tax Preparation – Self Employed
- 3 Deductions for Home Renovations
- 4 Sales Tax – State and Local
- 5 Taxes – State, Local and Foreign
- 6 Jury Duty
- 7 Donations for Volunteer Work
- 8 Deductions for Bad Debt
- 9 Military Personnel – Moving Expenses
- 10 Baggage Fees – Airlines – Self Employed
- 11 Mortgage Deductions – Interest
- 12 Sale of Your Home
- 13 Expenses Associated with Investments
- 14 Losses in Gambling
- 15 Alimony Payments
- 16 Contributions to Health Savings
- 17 Contributions to IRA
- 18 Contributions to 401k
- 19 Dependent Care – Flexible Spending Account
- 20 Tuition Fees
- 21 Home Offices – Self Employed
- 22 Corporate Cars – Self Employed
- 23 Travel Expenses – Business – Self Employed
Dental and Medical Bills
It’s possible to have around 7.5% of your expenses deducted, as long as they are related to the medical or dental bills of your spouse or other dependents. This amount can only be deducted from your gross adjusted income. It’s a good idea to properly calculate this amount to make sure that you’re not disappointed or miscalculate the expected returns for your San Diego tax preparations.
Fees for Tax Preparation – Self Employed
While this used to be a write-off this expense, it is only available for self-employed individuals now. You can get a write off on any fee that is associated with the process of tax preparations. This expense can be filed for under the list of miscellaneous tax deductions. Costs for tax preparations include fees that are related to electronic filing or working with a San Diego tax preparation company.
Deductions for Home Renovations
Usually, home renovations are not included in your list of deductibles. However, if these renovations are necessitated by a medical condition, requiring the need for the inclusion of wheelchair ramps, accessibility and other improvements to make the house habitable for a person with special needs, you can deduct these renovations as a medical expense in your San Diego tax preparations. Unfortunately, if these renovations improve the value of your home, you might not be eligible for it.
Sales Tax – State and Local
It is now possible for taxpayers of a state to qualify for deducting their income taxes or their sales taxes that were paid in the taxing year. Keep in mind that this is only limited to one option. If you’re deducting sales taxes, you cannot deduct income taxes and vice versa. Additionally, the limit for deductions on federal income taxes for local and state taxes per calendar year comes up to $10,000 only. This option is also feasible if you’re living in a state that has no income tax. In this scenario, you can deduct local and state sales tax from your San Diego tax preparations.
Taxes – State, Local and Foreign
Itemized deductions can also be claimed on certain local, state and even foreign taxes. This can be done for state and local taxes on personal property, real estate taxes that apply on a state, local and foreign level and even income taxes for local, state and foreign purposes.
In some cases, people might give their jury pay to their employers since they were still getting paid a salary while they were serving jury duty, they can easily claim it as a deductible. This only applies to their taxable income so pick this option wisely in San Diego tax preparations.
Donations for Volunteer Work
If you’re volunteering for a place, you can also deduct expenses related to your volunteering, such as the cost of gas when driving to and from the place. This can be done with ease by calculating the value per mile or even costs associated with parking space, uniforms and more. However, when filing for this tax deductible, you need to make sure that you have the proper documentation available from the charity work to support your claim.
Deductions for Bad Debt
This doesn’t relate to outstanding loans on your part. This is related to lending money to someone and never getting it back. As a bad debt, you stand to get a tax rebate on such transactions. However, to qualify for this, you need to have included the amount in your loaned or income cash and you also need to show proof that prior attempts were made to retrieve the amount. Once there is irrefutable proof that there is no chance in recouping the amount, you can include that proof in your San Diego tax preparations as well.
Military Personnel – Moving Expenses
While moving expenses could be claimed as long as they met the time and distance tests enforced by the IRA for a new job, this facility isn’t available anymore. However, members of the military who have to move due to a change of stations permanently can still avail this tax deductible. This means that as long as you meet the tests and requirements in San Diego tax preparations, you can recoup your moving expenses with ease.
Baggage Fees – Airlines – Self Employed
Baggage fees that are incurred while travelling can be claimed as a tax deductible, only if you are self-employed and travel frequently. Since this facility is not available for employed individuals, you should opt for airlines that offer lower air baggage fees in this scenario.
Mortgage Deductions – Interest
Mortgages can be very expensive for families but the good news here is that you can get a tax deduction based on this factor. For married couples filing together, they can stand to deduct their interest on all loans that come up to the amount of $750,000 or less. If you’re filing your taxes separately, you can only deduct interest from loans that come up to $375,000 or less.
Sale of Your Home
In San Diego tax preparation, the profit you generated from the sale of your home or other real estate property can also be excluded. For married couples who are filing together, they can exclude profits of up to $500,000 or less. For single filing, you will only be eligible to deduct up to $250,000 or less of the profit from your overall income.
Expenses Associated with Investments
While previously, investors could claim expenses such as custodial fees for the IRA, costs associated with accounting and investment advice, this option is no longer available for 2018. On the other hand, you can claim deductions for interest expenses. This relates to the interest which is paid on all the money that is being borrowed for taxable investments which can be purchased. Keep in mind that the overall amount is capped at the net total of your income from taxable investments per year.
Losses in Gambling
The good news for gamblers here is that tax rules for gambling remain unchanged. This means that if you did experience losses related to gambling, you can include them. However, you can only make deductions based on the total amount of the gambling income which you have reported. Additionally, when you’re preparing for this, make sure to include proof to substantiate claims of losses in San Diego tax preparations.
The bad news here is that alimony payments are not going to be legible for tax deductions if someone gets divorced after the 31st of December, 2018. On the other hand, if you’re paying alimony as part of your separation or divorce decree, you qualify for a tax deduction if you meet the following different conditions:
- Make payments with check, cash or money order.
- Do not file taxes with your former spouse or spouse.
- You have separated legally and no longer live in the same house.
- You’re not making payments for child support.
- All payments are being made to support your former spouse or estranged spouse.
If you meet all these conditions for alimony, you can make a deduction on your taxes. However, always pay attention to other local rules and laws which might apply for San Diego tax preparations.
Contributions to Health Savings
If you or someone else than your business employer has been making contributions in your health savings account, you can be eligible to make a tax deduction based on the contributions being made. Keep in mind that a health savings account is one that is established with the sole purpose of helping to pay for or reimburse one in the event of a medical emergency.
Contributions to IRA
Contributions that are being made in traditional IRA accounts can qualify for a tax deduction, if your spouse or you do not have a retirement account that is employer-based. Keep in mind that in San Diego tax preparations that deductions are also not allowed for Roth based IRA contributions. However, if you meet the criteria outlined, you can easily get a deduction that matches the full amount and can range from $5,500 to $6,500, particularly if you are 50 years old or older.
Contributions to 401k
Making contributions to 401k is always encouraged by employers but you’ll be happy to know that you also get tax benefits when you contribute to it. In short, you can easily get immediate taxable benefits, by lowering the total amount of your income which is taxable. This also means that your take-home pay is not impacted by contributing. It’s a good idea to do it beforehand for San Diego tax preparations.
Dependent Care – Flexible Spending Account
If you’re setting up a flexible spending account for a dependent in your care, such as your child you can easily put money tax free into it. Keep in mind that the maximum amount comes up to $5,000 per year. Additionally, this is a different account and should not be mistaken for the credit for child tax. This is usually used for the care and upkeep of physical or mental disabilities, handicapped individuals and other spouses or children.
To make financial matters easier for supporting your own education bills, you can easily deduct $4,000 from the overall fees that you spend for higher education. Furthermore, you need to make sure that you’re studying in a course or a field which qualifies for these tax returns. By paying attention to this factor, you can recompense a small fraction of the costs invested in your educational bills. The good news here is that you can also pay for your spouse. However, if you are married but not filling for taxes together, you don’t get to qualify for this option. For students of four year education post-secondary programs, you can deduct $2,500 with ease.
Home Offices – Self Employed
If you’re using your home as a home office, you can deduct a certain amount of bills and expenses in relation to it. However, this option is only valid if you’re using that part of your home exclusively for work purposes. Additionally, for San Diego tax preparation, you must also show that you have made your home to be the principal location for your business. While this was an option that was previously open for all businesses, it now only applies to self-employed individuals.
Corporate Cars – Self Employed
For business use, if you are primarily using your corporate cars, you can deduct your costs associated with the upkeep, fuel and mileage of the car. You can also estimate your overall cost for the car by the actual expense method. In any case, you need to provide proof of the car’s usage and you also have to ensure that you’re self-employed to qualify for this tax deduction.
Travel Expenses – Business – Self Employed
Expenses incurred while travelling due to your business are also deductible in your taxes. These include the costs associated with meals, business calls, transportation, lodging and more. Keep in mind that travel arrangements that are extravagant, lavish or affluent will not always qualify for tax deductions for business-related purposes. Additionally, this is applicable for self-employed individuals only.
These aren’t the only tax deductions you can qualify for. Make sure you look up all that you can qualify for in San Diego tax preparation. When you pay attention to all of them, you will find that you can actually save a lot of money in the process. Additionally, try to start your tax preparation earlier so that you have plenty of time to find out about more benefits you qualify for.