These Are The Many Ways You Can Cut Down On Your Tax Bill Ahead Of Filing Season

Advisor Written by: Teresa Barre April 10, 2020

As the popular Benjamin Franklin quote goes ‘in this world, nothing can be said to be certain, except death and taxes’. And soon, tax filing season, usually January 1 until April 15 in the United States, will come once again.

This means having to go through the daunting but necessary tasks of filing, computing and, of course, paying one’s dues to the state, which a lot of people dread. One thing taxpayers can look forward to though is the many deductions they can enjoy depending on their current age, marital status, and living location. Here are some common deductibles one may be qualified for.

The Usual Deductions

It’s worth noting though that married people are not required by the IRS to file their income tax returns as a couple.

First off, newbie taxpayers should be aware that there are given deductions for people who might have children and other dependents. The child tax credit is still at $2,000 a year with the opportunity to get an additional $500 credit for those who have dependents aside from their kids.

Married couples can also enjoy some perks if they decide to file their taxes together. The standard deduction for 2019 has been increased to $24,400 while the deduction for married taxpayers doing their taxes separately is $12,200. And according to the Internal Revenue Service (IRS), those who are heads of households are also entitled to a $18,350 deduction.

Additional Deductions

This raise on SALT deduction will benefit taxpayers living in high-property-tax states like New Jersey, Connecticut, and New York.

Meanwhile, a bill seeking to raise state and local property tax (SALT) deductions is reportedly currently in the works. If passed, H.R. 1757 would increase property tax deductions to $15,000 for single taxpayers and $30,000 for married ones. The previous cap was set at $10,000 during the 2017 tax cuts. Unfortunately, this good news’ benefits won’t be enjoyed by people yet as they file their 2019 taxes.

Home Loan Deductions

The mortgage interest deduction can be applied to both one’s primary home and a second one

Additionally, homeowners can also claim a deduction on their mortgage interest. This would require one to itemize on their tax return and could be applied to the interest paid for the first $1 million of mortgage debt. Note though that those who bought their homes after Dec. 15, 2017, can deduct on the first $750,000 of the mortgage only.

Charity Deductions

Here’s an incentive to be more charitable. Taxpayers over the age of age 70 and a half can make a ‘qualified charitable distribution’ before 2019 comes to an end and have the amount be untaxed. The standard deduction for this donation is $13,600 for single taxpayers and $26,600 for married taxpayers filing together in the next tax season.

However, people making the donation need to get acknowledgment letters from the charities they sent their checks to. They could acquire the letters by forwarding their checks, issued payable to the charity, along with a letter of instructions.