Gambling losses, repairs, insurance: what can be deducted from taxes for 2019
You already know that you do not have to pay federal income tax on all your income. What exactly should you deduct from your taxes in order to reduce your total taxable income? Go Banking Rates.
You have a chance to get acquainted with the most common tax deductions available for tax year 2019. If you have a difficult financial life or tax situation, you can consult a certified public accountant to make sure that you do not miss additional valuable deductions.
What is a tax deduction
A tax deduction is an expense that you can deduct from your income before taxing it. Tax deductions reduce your total taxable income and therefore the total tax you must pay. As a rule, tax deductions are used to encourage certain actions by taxpayers, such as making contributions to a retirement account, investing in a business, or providing for dependents.
Tax deductions for tax year 2019
Below we consider the tax deductions that you can get for the tax year 2019. Although it does not cover all possible tax deductions, the following list includes most of the main deductions available to you.
1. Medical and dental expenses
You can deduct medical and dental expenses for yourself, your spouse, and your dependents. However, you can only deduct the amount of your total medical expenses that exceeds 7,5% of your adjusted gross income.
2. Tax preparation fees (if you are self-employed)
Regardless of whether you make a declaration using a tax calculator or pay someone to write it, you can write off these expenses through tax deductions - if you are self-employed.
3. Home repair for medical purposes
If you make improvements to your home for medical purposes, such as adding ramps for wheelchairs or lowering cabinets for better accessibility, you can deduct the cost of these repairs from taxes as medical expenses. But if repairs are done to add value to your home, then they cannot be qualified as medical expenses.
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4. Local tax, sales tax, or state wash
Taxpayers have the option to deduct from the taxable income the local sales tax or state income tax that they paid during the tax year, but not both. According to recent tax laws, the annual deduction of local tax payments from federal income tax is currently limited to $ 10 (or $ 000 for married taxpayers who file separately).
If you live in a state without income tax, consider deducting your local sales tax.
5. Donations for volunteer work
You can deduct certain charitable work expenses. Let's say the cost of gasoline is if you use your car to get to the place of volunteering and back. If you don’t want to calculate the cost per mile, you can deduct the standard rate of 14 cents per mile. You can also deduct the cost of buying and servicing the uniform that you wear during volunteering, or the cost of parking, if necessary. Just make sure you have all the necessary documentation from a charity.
6. Bad debt
If you give a loan of money that you never returned, it is considered a bad debt. As a rule, to deduct bad debt from taxable income, you must show that you tried to get your money back, but there is no chance that you will be able to return it.
7. Reimbursement of expenses for the relocation of the military personnel family
Previously, anyone who met the IRS requirements for distance and time of relocation could receive a deduction for relocation. This deduction was suspended, in accordance with changes in tax legislation, in 2017. However, the suspension does not apply to military personnel who are relocated due to a constant change of duty station.
8. Charges for baggage on airplanes (if you work for yourself)
If you are self-employed or traveling on business, be sure to deduct the baggage fee from your taxes. If you are employed, you cannot take advantage of this deduction. In this case, choose an airline with a low cost of baggage.
9. Interest on mortgage loans
You can deduct the interest that you paid on loans up to $ 750. But if you are married and apply separately, you can deduct interest on loans only for up to $ 000.
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10. Mortgage Points
You can deduct Mortgage Points (or the prepaid interest you paid) to buy or build your home. As a rule, if you can deduct all the interest that you paid on the mortgage, then you can deduct all the points.
11. Selling a house
If you sold your house and made a profit, you can deduct almost $ 250 in profit from your income. If you are married and apply together, then deduct $ 000.
12. Health insurance on an individual basis
Health insurance is not taxable for self-employed taxpayers. If you were self-employed in 2019, you can deduct the insurance premiums that you paid for medical and dental insurance, as well as insurance to ensure qualified long-term care.
13. Investment costs
Prior to tax legislation changes, investors could deduct expenses such as investment advice, storage fees for individual retirement accounts and accounting expenses. However, these and other deductions were canceled in 2018. But you can demand a deduction of your expenses for investment interest, that is, interest paid on money borrowed for the acquisition of taxable investments. The amount you can claim for the deduction is limited by your net taxable investment income for the year.
14. Gambling losses
If you have suffered losses from gambling in 2019, but you can deduct them from the amount of taxable income. You can also claim your losses in the “other additional deductions” box, but be prepared to provide evidence of these losses.
If you paid child support, then most likely you can deduct the amount you paid from taxes.
However, child support is no longer deductible for those who divorced after 2018.
16. Car registration fees
If you meet certain requirements, you can include some or all of the vehicle registration fees in your tax deductions.
17. Some natural disaster losses
You can deduct losses from a natural disaster only if they occurred in the area where the federal government declared an emergency in connection with this disaster.
18. Military expenses for the business trip of reservists
If you travel more than 100 miles from your home as a military reservist, you can deduct travel expenses from the income that is indicated in the tax return.
19. Contributions to a savings account
Health Savings Accounts are tax-exempt accounts used to pay or reimburse certain medical expenses. You can claim a tax deduction for contributions that you or anyone other than your employer made to such an account.
20. IRA Contributions
Although the IRS rules do not allow deductions for Roth IRA contributions, you can claim the amount you invested in the traditional IRA if you and your spouse (when you are married) do not have a retirement account paid by the employer.
For 2019, you can deduct from taxes the maximum amount of allowable contributions, which is $ 6000 ($ 7000 for taxpayers older than 50 years).
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21. Contributions to plan 401 (k)
Plan 401 (k) provides a special tax account for retirement savings and immediate tax benefits. When you contribute to 401 (k), you are actually reducing the amount of your taxable income. For 2019, the limits of contributions are $ 19 or $ 000 if you are older than 25 years.
22. Costs of caring for a child
The Flexible Dependent Account (FSA) for Dependent Care allows you to set aside tax-free funds to cover your child care expenses. This is not the same as a child tax credit, which you can use for a spouse, parent, or other dependent person with a mental or physical disability. You are allowed to contribute up to $ 5000 tax-free to the FSA each year.
23. Membership fees
You can deduct membership fees or contributions to a qualified organization, but only if the amount you pay exceeds the value of the benefits you receive in return.
24. Work form (if you work for yourself)
Prior to the latest tax reform, anyone who had to wear uniforms or special clothes as part of their work could deduct these costs. However, this deduction is currently only available as business expenses for self-employed persons.
25. Home for business (if you work for yourself)
If you use part of your home for business, you can deduct the costs of your home office from taxes. To qualify for this deduction, you must regularly use part of your home exclusively for business. You should show that you use your home as your primary place of work.
26. Car for business (if you work for yourself)
If you use a personal car for your work or business, you can deduct the costs of it. To do this, use either the standard mileage rate or the actual expense method.
27. Travel expenses (if you work for yourself)
It is also possible to deduct business expenses that you incurred during your business trip. Costs may include transportation, meals, accommodation and airfare.
28. Education costs
For an American soft tax credit, you can deduct up to $ 2500 per student for four years of after-school education.
29. Work-related gifts and food
After the 2017 tax reform, entertainment business expenses are no longer deductible. But at the same time, you can deduct 50% of the cost of food, and the cost of gifts for business purposes will be deducted in full or in part, depending on the circumstances.
30. Teaching costs
K-12 educators can deduct from taxes up to $ 250 from unreimbursed expenses for books, supplies and computer equipment. To qualify for this deduction, you must work in an educational institution for at least 900 hours a year.
31. Student loan interest
You can deduct part or all of the interest on a student loan paid by you during the tax year, but not more than $ 2500.
32. Cash donations
You can deduct cash donations from IRS-approved charities. The deductible donation should not exceed 50% of your adjusted gross income. And you should make donation notes to deduct cash gifts.
33. Cashless donations
If you plan to give your car for charity, be sure to make a donation to a qualified charity. In this case, you will have the opportunity to receive a tax deduction.
34. Tax deduction for seniors
Good news for seniors: If you and your spouse (s) have crossed the threshold of 65 by the end of the tax year, you are entitled to a higher standard deduction.
35. Standard tax deduction
The standard deduction for 2019 is $ 24 for couples filing a declaration together, as well as for widows and widowers. For individual taxpayers and couples who file separately, the deduction is $ 000. If you file as the head of the household, you can deduct $ 12.
How to get a tax deduction
You can claim tax deductions annually when filing tax returns. Different deductions are indicated in different forms, so you must either hire a tax professional, use tax software, or follow the IRS instructions yourself to determine exactly where to make them.
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