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Tax season officially begins on Monday when the Internal Revenue Service (IRS) begins accepting returns for the 2024 tax year, but taxpayers should know about thousands of dollars worth of credits and deductions before filing. warns tax experts.
Karla Dennis, founder and CEO of tax strategy agency KDA, told FOX Business that taxpayers are finding themselves with $2,500 to more than $5,000 on hand due to a lack of awareness about certain tax deductions and deductions. He said there was a risk of leaving it behind. You are entitled to claim and have the tax owed reduced.
“A lot of taxpayers are leaving money on the table,” Dennis said. “I've been in this industry for over 30 years, and when I work with individuals on their taxes and talk to them, they know very little about many of the different tax credits available to offset their tax liability. I realized that.”
A variety of tax credits and deductions are available to taxpayers who spend money on certain activities, such as education, medical expenses, and state and local taxes.
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Taxpayers should familiarize themselves with the tax credits and deductions available to them before filing their tax return. (Michael Bochieri/Getty Images/Getty Images)
“Many taxpayers change jobs, go back to school, and pursue higher education, but they don’t know much about the Lifelong Learning Credit or the American Opportunity Credit, which can help reduce their overall tax bill. ” Dennis said.
She added that the American Opportunity Credit is refundable up to $1,000 and can be helpful for those who want to pay for tuition and other expenses while in school.
Dennis said taxpayers should monitor their spending on medical activities throughout the year, as they may qualify for the medical expense deduction if they exceed 7.5% of their adjusted gross income. For example, based on $50,000 of income, a taxpayer can deduct expenses over $3,750.
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Tax credits and deductions help taxpayers minimize their tax liability. (license/image)
“If your premiums are not pre-tax through your employer, you will need to take advantage of the premium deduction,” Dennis explained.
“In addition to copays for going to the doctor, emergency room, and doctor's appointments, and drug costs you pay to the pharmacy to get your prescriptions filled, there are also long-term care insurance deductibles,” she says. added. “If you drive to and from the doctor, you can still write off the mileage.”
The State and Local Tax (SALT) deduction is available up to $10,000 for taxpayers who itemize their returns. Dennis said taxpayers applying for the credit should make sure to tally their income taxes, property taxes and DMV fees.
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The IRS' tax filing season for tax year 2024 begins on Monday, January 27th. (Photo by J. David Eyck/Getty Images/Getty Images)
Dennis said individual taxpayers “need to be aware and be careful that taxes are due year-round, from January to December,” so they should consult a tax advisor early in the year to plan ahead. He said they should consider consulting.
She recommends that taxpayers look at their expenses one by one for each month of the year over a 12-day period, which she calls “12 by 12.” We believe this will help taxpayers avoid being overwhelmed by the burden. At the last minute, you forget about the savings you could have made when filing your taxes.
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Dennis says that by pausing once a return is ready and before filing, taxpayers can think about things they may have forgotten and save themselves the hassle of pre-filing additions and amending their returns. He added that it might be possible.
