- March 6, 2024
IRS has levied several tax deductions for the tax year 2024, as a result of which, tax filers might get lower tax refunds than they anticipated. It is important to determine the eligibility for tax credits and tax deductions before filing the tax returns. It is important to ascertain that deductions can reduce the amount of income before calculating the taxes one owes. Similarly, tax credits can reduce the tax amount they owe and increase their tax refund. Some tax credits can give tax filers a refund, even if they don’t owe any tax.
Tax Deductions For Individuals
Tax deductions will reduce the amount of taxpayers’ income that is generally subjected to tax. It generally reduces the amount of tax that the individual may have to pay. Generally, most of the taxpayers will qualify for standard deductions.
The tax deductions will reduce the quantum of taxpayers’ income before they can calculate the taxes they owe. Most people go with the standard deductions, and it keeps changing each year in accordance with inflation. The amount of standard deduction will depend on the filing status of the taxpayer, their age, their disability status, etc. Some people also itemize their tax deductions if their taxable income is more than their standard deductions.
Standard Deductions
Standard deductions are a specific amount that comprises the sum of the basic standard deduction and another standard deduction amount for age or other disabilities like blindness. The standard deductions can reduce the amount of taxable income. The IRS will adjust these standard deductions every year to adjust for inflation. Its value also varies by the filing status. For instance, if taxpayers are 65 years old or are blind or if the taxpayer can claim themselves as a dependent, then the deductions will be more. Other taxpayers cannot use the standard deductions if they itemize their deductions.
Itemized Deductions
Some taxpayers might also choose to itemize their deductions if their total allowable itemized deductions are greater than their standard deductions. Some taxpayers are asked to itemize their deductions because they are not entitled to use the standard deductions. The taxpayers who the IRS asks to itemize their deductions are,
- Married individuals file returns as married filing separately, and their spouse itemized deductions.
- Non-resident aliens and dual-status aliens during the tax year.
- Estates and trusts, partnerships, and common trust funds should itemize their deductions.
- Individuals who file their return for less than twelve months due to changes in their annual accounting period should itemize the deductions.
Backlink Opportunity-In order to ascertain the itemized deductions, taxpayers can make use of Schedule A. The income tax that they owe will be less if they take a large amount of standard deduction or itemized deductions
Tax Credits and Refunds
Tax credits will also reduce the income tax bill that the taxpayer owes and are calculated based on the taxes the payer owes in their tax return. Some of the tax credits, such as the earned income tax credit, are completely refundable. If the tax bill of the taxpayer is less than the amount of their refundable credit, then they can get the difference back in their refund. To claim this tax credit, taxpayers should maintain all the records to prove their eligibility for the tax credits they claim. Also check if they qualify for credit claims, in the year following their tax return.
IRS Changes and Deductions with Tax2efile
The IRS has also eliminated certain deductions, such as entertainment and fringe benefit deductions, local lobbying expenses deductions, employee mass transit, commuting expenses deductions, etc. To understand and apply these deductions appropriately and to avail of tax benefits, citizens should file their returns with an IRS-authorized service provider like Tax2efile.