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If you’re someone paying income tax, you’ve likely heard the term “tax deductibles”, but what does that mean when something is deductible? Read on to learn more about what it means, examples of what is tax-deductible, along with some things you may not know were deductible.

Definition

When something is tax-deductible, it means your taxable income will not cover these items. For example, if your income is $50,000 and you have deductibles of $5,000, your taxable income will decrease to $45,000. There are a lot of things that are tax-deductible and more get added by the government all the time, however, the authorities do have a set list of what is considered tax-deductible in order to reduce misconduct in taxation.

 

Common Examples

These are general examples, however, some may require the meeting of certain requirements.

 

  • Charitable Donations
  • Business Expenses
  • Certain Home Improvement Projects
  • Mortgage Interest
  • Recovery Rebate Credit
  • Medical and Dental Expenses
  • IRA Contributions
  • State Taxes
  • HSA Contributions
  • Further Education

 

However, there are also a lot of things people do not realize can count as tax-deductible which is why having a great financial advisor by your side can be beneficial. Some but not all of these including but not limited to the following:

Uncommon Deductibles

  • Reinvested Dividends
  • Child Care Credit
  • Parents as Dependents
  • Saving Your Raise
  • Work Uniforms
  • Moving Expenses for Military Families
  • Performing Artist Business Expenses
  • Half of Self-Employment Tax
  • Gambling Losses
  • Whistleblower Fees

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