At a Glance Mortgage interest is generally tax-deductible for primary or secondary homes. Deductibility applies to mortgages, home equity loans, and refinanced loans. New limits are set for mortgage interest deduction under the Tax Cuts and Jobs Act (TCJA). Homeowners need to itemize deductions and …
At a Glance Gambling losses can be tax deductible, but there are limitations. Losses cannot exceed total gambling winnings. Documentation of gambling activities is crucial for deduction. Gambling losses are reported as an itemized deduction on Schedule A (Form 1040). For the casual hobbyist or the s…
At a Glance Foreign tax credits directly reduce U.S. tax liability on a dollar-for-dollar basis. Foreign tax deductions allow you to deduct foreign taxes as an itemized deduction on Schedule A. Form 1116 is used to claim the foreign tax credit on Form 1040 or 1040-SR. It’s important to underst…
At a Glance Childcare expenses are not directly deductible from income. The IRS provides the Child and Dependent Care Credit to help offset childcare costs. Qualifying individuals include children under 13, disabled spouses, or dependents. The credit can be worth up to 35% of qualifying expenses, wi…
At a Glance Child care credits are not tax deductions, but they serve to reduce overall tax liability. The Child and Dependent Care Credit helps working parents offset child care expenses. To qualify for the credit, expenses must be for the physical care and well-being of a qualifying individual. Th…
At a Glance Volunteers can deduct mileage driven for charitable purposes on their tax return. The standard mileage rate for charitable mileage in 2021 is 14 cents per mile. Itemizing deductions on Schedule A is required to claim the deduction. Actual expenses for gas and oil can be deducted instead …
At a Glance Business travel expenses are deductible if they are ordinary, necessary, and reasonable, and occur away from the taxpayer’s regular place of business. Deductible expenses include transportation, lodging, meals (with limitations), and other travel-related costs. Proper documentation…
At a Glance Startup costs can be deductible for new business owners. IRS allows up to $5,000 deduction in the first year. Remaining costs can be amortized over 15 years. Limitations exist on deducting startup costs. Starting a new business venture often involves numerous upfront costs. From market r…
At a Glance The IRS allows deductions for business gifts with a limit of $25 per recipient per year, not including incidental costs. Deductible business gifts must be part of a professional relationship and given with a clear business purpose. Documentation of each gift, including cost, date, purpos…
At a Glance Casualty and theft loss deductions are limited to federally declared disaster areas under the Tax Cuts and Jobs Act (TCJA). Losses must be sudden, unexpected, or unusual and directly related to the declared disaster to be deductible. Deductions require itemizing on Schedule A (Form 1040)…