Residential Energy Credit
If you updated your home (or your apartment building, if you’re a landlord) to be more energy-efficient, you can deduct these changes from your tax return. According to the IRS, “qualifying updates are solar electric property, solar water heaters, geothermal heat pumps, small wind turbines and fuel cell property.” Additional changes to roofs and appliances can also be deducted from your return, but each item has different requirements. If you’ve increased any part of your property’s energy efficiency and you’re unsure of whether or not it qualifies for the residential energy property credit, ask your tax preparer. They’ll be able to determine which updates are applicable to your return.
Medical Expenses Deduction
Did you have a surgery this past year? Frequent doctor’s visits? If you had any medical expenses at all, gather each receipt and explanation of benefits (EoB) you have. For 2021, medical expenses that are more than 7.5% of your adjusted gross income can be deducted from your return. It’s worth the time to calculate the total amount spent on medical purposes; you could receive a larger return because of it. Want a more comprehensive list of what can be included as a medical expense? eFile.com has listed out what qualifies as a tax-deductible medical expense.
Charitable Contributions
If you contribute to a nonprofit organization regularly, be sure to keep track of your donations. The full amount can be deducted from your filing, providing you with a slightly larger tax return. Be aware though, that each organization to which you donate must be a qualified nonprofit under tax law in order to be deductible.
Continuing Education Tax Credit
If you or a dependent of yours was enrolled in a higher education program within the past tax year, you can deduct this from your filing. Any income spent on tuition and/or required fees counts toward the deduction. The deduction does not apply to books, room and board, or other expenses. However, you cannot claim this credit if you are married and filing separately.
Business Use of Home
The number of contract employees and freelancers is increasing each year. If you’re a freelance or contract worker and you work from home, you could deduct work-related expenses related to your home office. Some examples include your electricity bill, your wifi, and any other resources or items necessary to complete your work in your house. Your tax specialist can review your expenses for you and determine which items qualify for a tax deduction.
It’s important to keep in mind that some of these deductions may not qualify if you are electing to go with a standard deduction when filing.
Have questions about other potential tax deductions? We’re here to help you. Contact us today to review your unique tax situation.
