Tax credits and deductions can really save your money and that is why you should have a knack for them. Tax breaks will reduce your taxable income thereby reducing the tax liability. To make your taxable income lower, you need to minus the tax deduction amount from your income. You then need to know when your taxable income reduces, so does your tax bill. On the other hand, a tax credit refers to a dollar-for-dollar reduction applied to your actual tax bill.
In 2022, you can claim tax benefits in many ways but generally, you have two ways that you can use to claim your tax deductions: itemize deductions or the standard deduction.
Standard Tax Breaks for 2022
A standard deduction of tax basically means a flat dollar with no questions about your adjusted gross income. The options for you in this category are shown below.
|Filing Status||Tax Year: 2022|
|Married & Filing Jointly||$25,900|
|Married & Filing Separately||$12,950|
|Head of Household||$19,400|
Note: People who are over the age of 65 or the blind will get larger standard tax write-offs.
For itemizing deductions you get to cut your taxable income by taking the available income tax deductions you are qualified for. You should know that the more your deductions, the fewer taxes you will pay.
Tuition and Fees Deductions
If you are paying education expenses like tuition fees, you have a chance for some tax write-offs in 2022. Whether you are paying for yourself, your spouse, or any of your dependents, you can take advantage of up to a $4,000 deduction. That amount can be claimed by those with a gross income of $80, 000 and less and who are also single filers. Just complete two tax forms to claim your deductions, these are form 8917 and Schedule 1 and Tuition and Fees Deductions. For the tuition and fees deduction, you do not have to itemize.
Credit for Family Leave
As a self-employed worker, you stand a chance of benefitting from credit for family leave. Because of the COVID-19 pandemic, you have a chance of claiming this refundable credit if you could not work. It will help you to recoup the lost self-employment income. However, it can be limited when you have claimed a sick leave credit.
Performing Artists’ Business Expenses
Performing artists with low income stand a chance of deducting some business expenses like the cost of completing a rehearsal. To qualify for this deduction, you need to have a gross income of $16,000 or less.
This year has great tax seasons and dozens of available tax breaks are available for your relief. You can take advantage of the available ones in various domains like education, business, household, among others. You should understand that tax write-offs go a long way in lowering your taxable income.