Lowering your taxable income is the key to paying less to the IRS. Several federal tax deductions and credits can help
By Kelley Taylor – Kiplinger Reports
Tax season can be stressful and complicated. Thankfully, tax credits and tax deductions can reduce your tax bill and ease the frustration of owing too much money to the IRS.
Here are some common IRS tax deductions and credits. Whether you are a homeowner, parent, charitable giver, older adult, or self-employed person, there are various ways to optimize your tax savings.
IRS tax return common credits and tax deductions
If you haven’t filed your taxes yet (Tax Day was April 15 for most), you can use these and other tax breaks (if you are eligible for them) to reduce tax liability. If you have already filed, this information can help you plan to maximize your tax savings for the 2024 tax year (returns you file in early 2025).
Consult with a qualified tax professional to ensure you take full advantage of the credits and deductions available to you in compliance with tax laws. Doing so can help you to keep more of your hard-earned money and achieve greater financial stability.
The standard deduction
If you are like most taxpayers, you take the standard deduction instead of itemizing deductions.
• The standard deduction reduces your taxable income by a predetermined, fixed dollar amount.
• Itemized deductions can also reduce your taxable income, but the amount varies and is not predetermined.
However, to decide whether to itemize, you must know the standard deduction amount for each tax year. See What’s the Standard Deduction for 2024?
Family-focused tax credits
Child Tax Credit: The child tax credit (CTC) allows eligible parents and caregivers to reduce their tax liability, possibly resulting in a tax refund. However, not everyone can claim the CTC, and credit amounts can differ for those who can. The child tax credit is based on income, filing status, the number of children, and whether the IRS considers your dependent a qualifying child.