When it comes to taxes, every penny saved counts. That’s why tax write offs and tax deductions are your best friends during tax season.
Tax write-offs, also known as deductions, can be claimed by both small business owners and individual taxpayers to reduce their taxable income.
Let’s go over how to unlock the potential of 1099 deductions, maximize savings, and avoid commonly missed opportunities. We’ll explore top income tax deductions and tax write-off examples to help make your filing process smoother.
How do tax write-offs work?
A tax write-off, also known as a tax deduction, reduces the amount of your income subject to taxes. In essence, write-offs lower your taxable income, which in turn reduces the amount of tax you owe.
For example, if you earn $100,000 and claim $20,000 in deductions, you’ll only be taxed on the remaining $80,000.
Understanding the difference between a write off vs deduction is simple: they’re essentially the same thing. Both terms refer to expenses that the IRS allows you to subtract from your gross income. The key is knowing which expenses qualify as the best tax write-offs for your situation and how to claim them.
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Who is eligible to deduct expenses on their income taxes?
Eligibility for claiming deductions varies based on your tax filing status and financial activities. The IRS provides specific deductions for different types of taxpayers, helping reduce their overall tax burden.
- Individuals may benefit from both standard and itemized deductions, including homeowner expenses like mortgage interest, state and local taxes, medical costs exceeding 7.5% of income, and charitable donations when itemizing their returns.
- Self-employed can deduct business-related expenses including health insurance premiums, home office costs, vehicle mileage, professional subscriptions, and retirement contributions. They can also benefit by deducting half their self-employment tax.
- Small businesses: may reduce their tax liability through deductions for operational expenses like payroll, rent, utilities, advertising, professional fees, and equipment purchases. Small business tax deductions can help directly lower a business’s taxable income.
- Corporations can also claim deductions for business operating costs, employee benefits, capital investments, and charitable contributions. Like other entities, they must maintain detailed records to support their claimed deductions during potential IRS reviews.
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23 Common tax write-offs
Tax write-offs come in many forms. Here’s a list of tax deductions and credits to consider.
1. Standard deduction
The standard deduction is a fixed amount you can deduct based on your filing status. For the 2024 tax year, the standard deduction amounts are:
| Filing Status | 2024 Tax Year |
| Single | $14,600 |
| Married Filing Jointly | $29,200 |
| Married Filing Separately | $14,600 |
| Head of Household | $21,900 |
2. Child tax credit
The child tax credit is designed to provide financial relief to families with dependent children. For each qualifying child under 17, parents can claim a credit of up to $2,000 per child, with $1,500 of that amount being refundable as of 2024.
To qualify, the child must be a U.S. citizen or resident alien, have a valid Social Security number, and live with the taxpayer for more than half the year. This credit phases out for individuals earning over $200,000 or $400,000 for married couples filing jointly.
3. Child and dependent care credit
The child and dependent care credit helps working parents or guardians offset costs for childcare or dependent care while they work or look for work. This credit covers a percentage of up to $4,000 in expenses for one qualifying person or $8,000 for two or more. The percentage varies based on income, ranging from 20% to 35% of eligible expenses. Qualifying dependents include children under 13 or a disabled spouse or adult dependent.
4. Saver’s credit
The saver’s credit incentivizes low- to moderate-income individuals to save for retirement by offering a credit for contributions to IRAs, 401(k)s, and other retirement accounts.
Eligible taxpayers can claim a credit worth 10%, 20%, or 50% of their contributions, up to a maximum of $2,000 ($4,000 for married couples filing jointly). The credit phases out based on income limits, starting at $23,000 for individuals and $76,500 for married couples filing jointly in 2024.
5. Mortgage interest
The mortgage interest deduction allows homeowners to deduct interest paid on loans used to buy, build, or improve a home.
Homeowners may also be able to claim interest paid on second homes. This deduction can significantly reduce taxable income, especially for new homeowners with high-interest payments.
6. State and property taxes
Homeowners can deduct property taxes paid to state and local governments on their primary residence and second homes. This deduction is capped at $10,000 per year under the SALT (State and Local Tax) cap, which includes property, income, and sales taxes combined.
7. Property deductions
Property deductions encompass a range of write-offs, including property taxes, mortgage interest, and home office expenses. Homeowners renting out properties can also deduct maintenance, repairs, and depreciation. These deductions reduce taxable income derived from rental properties or homeownership costs. Specific rules apply depending on the type of property and its use.
8. Lifetime learning credit
The lifetime learning credit helps taxpayers offset the costs of higher education. Taxpayers can claim 20% of the first $10,000 spent on tuition and related expenses, with a maximum credit of $2,000 per return.
The credit applies to undergraduate, graduate, and professional courses, making it a flexible option for lifelong learners. Income limits apply, with phase-outs beginning at $80,000 for single filers and $160,000 for joint filers.
9. Business expenses
Taxpayers running a business can deduct business expenses like rent, utilities, office supplies, and employee salaries. These deductions lower taxable income and can cover a wide array of costs directly related to running a business. Self-employed individuals can also claim travel, internet, and marketing expenses. For specifics, refer to the IRS guide on business expenses.
10. Medical and dental expenses
Taxpayers who incur unreimbursed medical and dental expenses exceeding 7.5% of their adjusted gross income (AGI) can claim these as deductions.
Qualifying expenses include doctor visits, prescriptions, dental care, and long-term care services. These deductions are valuable for individuals or families with significant healthcare costs. More details can be found on the IRS Medical Expenses page.
11. American Opportunity Tax credit
The American Opportunity Tax Credit (AOTC) provides a tax credit of up to $2,500 per year for undergraduate education expenses. Eligible taxpayers can claim the credit for up to four years, with up to $1,000 being refundable.
Qualifying expenses include tuition, books, and supplies. Income limits apply, with phase-outs starting at $80,000 for single filers and $160,000 for joint filers.
12. Earned income tax credit (EITC)
The earned income tax credit benefits low-to-moderate-income workers by providing a refundable credit based on earned income and the number of dependents. The maximum credit for 2024 is $7,830 for families with three or more qualifying children. Income limits apply based on filing status.
13. Student loan interest
Borrowers can deduct up to $2,500 of student loan interest paid during the tax year. This deduction applies to federal and private loans used for higher education. Eligibility phases out at incomes above $75,000 for single filers.
14. Retirement contributions
Contributions to qualifying retirement accounts, such as traditional IRAs and 401(k)s, are tax-deductible, allowing taxpayers to reduce their taxable income. For 2024, the contribution limit for 401(k) plans is $23,000. Traditional IRA contributions are capped at $7,000.
15. Health savings account contributions
Contributions to a Health Savings Account (HSA) are tax-deductible and can be used to pay for qualified medical expenses. In 2024, the contribution limit is $4,150 for individuals and $8,300 for families, with an additional $1,000 catch-up contribution allowed for individuals 55 and older.
16. Charitable contributions
Tax write offs for donations are considered when you make a qualifying charitable donation to an organization that can be deducted from taxable income. Taxpayers can deduct cash contributions up to 60% of their adjusted gross income (AGI).
Non-cash donations, such as clothing or vehicles, are also deductible but require valuation documentation. Make sure to obtain receipts for all donations, as they are necessary for claiming this deduction.
17. Adoption credit
The adoption credit helps offset costs associated with adopting a child, including adoption fees, legal costs, and travel expenses. For 2024, the maximum credit is $16,810 per child.
The credit is nonrefundable but can be carried forward for up to five years if it exceeds your tax liability. Eligibility phases out for higher-income taxpayers, starting at $252,150 of modified adjusted gross income.
18. Home office deductions
Self-employed individuals or small business owners who use part of their home exclusively for business purposes can claim home office deductions. Deductible expenses include a portion of mortgage interest, utilities, and property taxes, based on the percentage of the home used for business.
The simplified method allows a deduction of $5 per square foot, up to 300 square feet. Note that this deduction is not available to employees working from home.
19. Electric vehicle tax credit
The electric vehicle (EV) tax credit incentivizes the purchase of clean-energy vehicles. Taxpayers can claim up to $7,500 for qualifying new EVs and up to $4,000 for used EVs. Eligibility depends on the vehicle’s manufacturer, battery capacity, and price limits. Income thresholds also apply, phasing out the credit for higher earners.
20. Educator expenses deduction
Teachers and eligible educators can deduct up to $300 annually for classroom expenses, such as supplies and educational materials. This deduction applies to K-12 teachers, principals, and aides who work at least 900 hours in a school year. Married educators filing jointly can claim up to $600 if both spouses qualify.
21. Energy efficient home improvement tax credit
The energy efficient home improvement tax credit encourages homeowners to make eco-friendly upgrades. Qualifying improvements include energy-efficient windows, doors, insulation, and HVAC systems. For 2024, homeowners can claim up to 30% of qualifying costs, with annual caps on specific improvements.
22. Solar tax credit
One of the more commonly missed tax deductions, the solar tax credit, or Investment Tax Credit (ITC), allows homeowners to claim 30% of the cost of installing solar energy systems. This includes equipment and labor costs for solar panels and battery storage systems. There is no maximum credit limit, making it a valuable incentive for those investing in renewable energy.
23. Gambling loss deduction
Taxpayers can deduct gambling losses up to the amount of their gambling winnings, but only if they itemize deductions. To claim this deduction, you must keep accurate records of winnings and losses, including receipts, tickets, and statements. Professional gamblers and casual bettors alike can benefit, but the losses cannot exceed reported winnings.
Maximize your tax savings with write-offs
Don’t let valuable tax savings slip through your fingers this year. By understanding and properly documenting your eligible write-offs, you may be able to significantly reduce your tax burden.
From home office expenses to professional development costs, some of the most overlooked tax deductions could be the key to keeping more money in your pocket.
Take time to review your expenses carefully, consult with a tax professional if needed, and ensure you’re claiming every deduction you’re entitled to. Smart tax planning isn’t just about following the rules—it’s about making the rules work for your financial benefit.
FAQs
Is tax deduction the same as a tax write-off?
Yes, tax deduction and tax write-off are interchangeable terms that reduce your taxable income.
What can I write off on my taxes?
You can write off eligible expenses such as mortgage interest, charitable contributions, business expenses, medical costs, and home office deductions.
How much do you get back from tax write-offs?
The benefit of a write-off depends on your tax bracket. For example, a $1,000 deduction could save you $220 if you’re in the 22% tax bracket.
What is the difference between standard and itemized deductions?
The standard deduction is a fixed amount based on your filing status, while itemized deductions allow you to deduct specific expenses like property taxes and medical costs.
What are some non-deductible expenses?
Non-deductible expenses include personal living costs, fines, penalties, and political contributions.
What is the difference between tax credit vs tax write-off
A tax credit directly reduces the taxes you owe dollar-for-dollar, while a tax write-off reduces your taxable income.
Can I write off business expenses on my personal taxes?
If you’re self-employed, you can deduct business expenses from your personal taxes using Schedule C. For other business types, expenses must be reported through the business tax return.
