As we close out on another challenging year, let’s take a look at some end of year tax tips & tax saving opportunities you may have.
Donations
If you make a donation of up to $300 to a qualified charity, you can claim it on your return even if you use the standard deduction.
For those who do itemize, you can donate up to 100% of your adjusted gross income.
FSA Accounts
For this year, you can put a maximum of $2,750 into a Flexible Spending Account. Also, for this year, you can roll over any unused funds into 2022.
Pay Bills
Paying your doctor and medical bills before the end of the year counts toward your itemized medical expense deduction. You can also pay your property tax bill early to claim that expense on this year’s tax return.
Count Your Losses
You can sell investments that have lost money to maximize your deductions. This is called tax harvesting.
Side Hustle Write Offs
If you started a side hustle this year, you can maximize your deductions with business expenses. Cell phone charges, internet service, mileage for business trips may all qualify.
Rebate Credit
If you did not receive the full value of your stimulus check, you can claim a recovery rebate credit.
Sick Leave for Self Employed
Some self employed individuals can receive a refundable tax credit up to $200 per day that they were unable to work between 4/1/2021 and 9/31/2021 because they had COVID19.
Student Loan Interest
If you have student loans, you can deduct up to $2,500 of interest incurred.
Half of the self-employment tax
Self-employed workers need to pay the whole 15.3% tax, but can then deduct the employer portion on their federal tax return. Use Schedule SE to calculate your self-employment tax and Schedule 1 to claim this deduction.
Home office deduction
For taxpayers who worked from home regularly in 2021, the IRS allows a deduction for associated expenses, including repairs, utilities, rent, a security system and renters insurance.
QBI deduction
The qualified business income deduction also called the QBI deduction, lets you deduct up to 20% of the income if you had business income from a sole proprietorship, partnership, S corporation, trust, or estate.
Need more end of year tax tips? Contact Hedley & Co, CPAs for a consultation.