One of the best ways to have more money is to keep more money in the bank. Tax write offs are a key to this. When you pay your taxes each year, there are tax deductions that you can claim that will keep more money in your pocket. Check out our tax tips for write-offs so that you can pay less in taxes today.
How do tax write-offs work?
A tax write-off (or tax deduction) is an expense you can write off from your taxable income. You are essentially subtracting the write-off from your total income so that you end up with a smaller tax bill.
How do write-offs affect my taxes?
Tax write-offs lower your taxes. Legitimate deductions for taxes can reduce how much you owe and help you qualify for a bigger tax refund.
What is a standard deduction?
A standard deduction is a standardized dollar amount that you can use as a deduction. You can opt to use a standard deduction over itemized deductions (we’ll explain those below). Anyone can use a standard deduction, and they are the only tax write-off you can use if you go this route. It can be a simple way to do your taxes because you just deduct the standard amount from your taxes. We’ve compiled the standard deductions below for single filers, married filing separately, head of household, and married filing jointly in the chart below. You can also use this standard deduction tool to calculate your deduction amount.
|Filing Status||2021 Tax Year|
|Married Filing Jointly||$25,100|
|Married Filing Separately||$25,550|
|Head of Household||$18,800|
What are itemized deductions?
Many people opt for itemized deductions instead of claiming a flat standard deduction. You can compile a list of deductions that reflect your personal situation with itemized deductions. This will take more time, but many people find more tax write-offs this way. Try calculating both as you prepare your taxes, and see which route is more beneficial.
11 common tax write offs
You can choose to go with standard deductions, or you can itemize your deductions. It’s your choice. But if you’re going the itemized deduction route, here are a few common tax write-offs that you should look for when preparing your taxes.
You can deduct the amount you pay in mortgage interest. You can claim up to $750,000 in mortgage interest as a couple or $375,000 as a single person.
You can deduct up to $10,000 in property taxes under the Tax Cuts and Jobs Act. This includes all state and local taxes, including property tax.
All those expenses that you pay from owning property can really add up. You can write off things like your mortgage insurance premiums and other real estate taxes you paid.
If you are self-employed or pay your business expenses, then there is a chance that you write off business expenses. You can have tax deductions for business-related expenses for things like computers, software, or even your home office.
Medical and dental expenses
You can write off medical and dental expenses. You can write even more medical and dental expenses if you’re self-employed and have to fund your own healthcare.
State and local taxes
This tax write-off is nicknamed SALT for short, but you can deduct state or local taxes. You also have some ability to deduce some foreign income tax as well.
Student loan interest
If you paid student loans in 2021, you can write off up to $2,500 in interest from your taxable income. This one can really come in handy!
If you need more motivation to set aside some funds for retirement, then this may be it. You can write off contributions to retirement accounts such as 401k or IRAs. It’s never too late to start saving, and this one can save you on your taxes each year as well.
Health savings account contributions
Your HSA account contributions can also help you with your tax write-off. You can deduct up to $7,200 as a family or $3,600 as a single person. HSAs are a great way to manage medical expenses, so take the time to deduct your contributions.
Self-employed health care premiums
Are you self-employed and paying for your health care? You can deduct your health care premiums. This can help out with this added expense in your business.
Charity can give back to you! For itemized deductors, you can write off charitable contributions. The limit is $300 per person, so make sure you include this on your next tax return.
Keep ahold of more of your money
Take the time to calculate the deduction on your taxes. Write-offs are the key to holding on to more of your money. Research your situation and consult professionals.
What does it mean when something is a write off?
A tax write-off is also known as a tax deduction. You can use this expense to make your taxable income smaller to pay fewer taxes.
What is considered a write-off?
You can claim many deductions, including charitable donations and retirement contributions.
What is a tax write-off example?
Examples of tax write-offs include student loan interest, medical expenses, and mortgage interest.