The amount increases to $7,000 for contributions during 2024, but there’s no change in the catch-up amount for people aged 50 and older. Your contributions to a traditional IRA are tax-deductible. The maximum contribution for 2023 in a traditional or Roth IRA is $6,500, plus another $1,000 for people who are 50 years old or more. The IRS has a chart to help you calculate your credit. The maximum contribution amount that qualifies for the credit is $2,000 ($4,000 if married filing jointly), making the maximum possible credit $1,000 ($2,000 if married filing jointly). Any rollover contributions do not qualify for the credit. The contributions you make to a retirement plan such as a 401(k) or a traditional or Roth IRA give you a tax credit of 50%, 20% or 10%, depending on your AGI, which you report on Form 1040. You can’t claim this credit in the same year that you claim the lifetime learning credit. The amount of your credit is determined by your income.

Qualifying expenses include tuition, fee payments and required books or supplies for post-secondary education for yourself, spouse or dependent child. “For students who are in the first four years of college, this credit could provide greater tax savings than the lifetime learning credit.” “If you, your spouse, or child are in school, make sure to look deeper into education credits,” says Daniel Fan, managing director and head of wealth planning at First Foundation Advisors, an Irvine, California-based financial institution. The credit is worth 100% of the first $2,000 of qualified education expenses paid for each eligible student and 25% of the next $2,000 of qualified education expenses. If the amount of taxes you owe is zero because of this credit, the IRS says 40% of any remaining amount of the credit (with a maximum of $1,000) can be refunded to you. The maximum annual credit is $2,500 per eligible student. The American opportunity tax credit offers a tax break for the first four years of higher education. American Opportunity Tax Education Credit Note: You can’t claim this credit in the same year as the American opportunity tax credit using the same expenses. You should check IRS Publication 170 to determine the income qualifications. The amount of your credit depends on your income. The credit isn’t refundable, which means it can be used to pay any taxes you owe, but you can’t receive any of it as a refund. The expenses can include tuition, fee payments and required books or supplies for post-secondary education for yourself, spouse or dependent child. The credit allows for a dollar-for-dollar reduction on the amount of taxes owed. However, the top credit you can receive per tax return is worth $2,000. The maximum amount of expenses you can deduct is up to $10,000 for an unlimited number of years. The lifetime learning credit allows people to claim a tax credit for taking classes at a community college, university or other higher education institution. Lifetime Learning Credit Education Credits For 2023, you can deduct 22 cents a mile for travel you made for medical purposes. Trips to your doctor’s office or hospital appointments qualify for medical mileage. In those cases, you can deduct the expenses in the year you charged the card, not necessarily the year in which you repaid them. To claim medical-related expenses on your 2023 tax return -which you’ll file in April 2024 -the expenses must have been paid in 2023, unless they were charged to a credit card. Medical and dental expenses qualify for a tax deduction, though you can deduct only the costs that exceed 7.5% of your AGI. Donations of items or property also are considered deductible charitable contributions. Generally, you can deduct charitable contributions of cash totaling up to 60% of your adjusted gross income, or AGI. You can deduct mortgage interest, as mentioned above, as well as real estate taxes that you paid during the year for your home. State Taxes PaidĪgain, you can deduct state income taxes that you have paid, but the write-off is capped at $10,000 for all deductible state and local taxes. If you got your mortgage before December 16, 2017, you can deduct interest on up to $1 million of debt ($500,000 for married taxpayers who are filing separately). The write-off is limited to interest on up to $750,000 ($375,000 for married-filing-separately taxpayers) of mortgage debt incurred after December 15, 2017. The interest you pay for your mortgage can be deducted from your taxes. The limit is scheduled to last through the 2025 tax year, unless Congress extends it.

Under the Tax Cuts and Jobs Act, deductible state and local income taxes, including property taxes, are capped at $10,000.

General contractor tax write offs