Wondering what 2019 tax credits to consider as you prepare your taxes? While there are a lot of them out there, here are a few of the biggest ones to keep in mind.
2019 Taxes Standard Deduction
For 2019 the standard deduction is $12,200 for single filers and $24,400 for joint filers, making it the most important for many Americans. Some people may be able to save more money by using other deductions, but this is the main one to look into as you prepare your taxes from last year.
Reduce Taxes with Retirement Contributions
How much money did you add to your Individual Retirement Account (IRA) last year? Did you contribute any money to your company’s 401K? These types of accounts are pre-tax, meaning they actually reduce your tax bill.
If you didn’t contribute last year, there’s good news. You can continue to contribute to an IRA a few months into the following year, so depending on when you read this, you may still be able to contribute to lower your tax bill and boost your retirement savings.
The best part is the employer-sponsored plans have relatively high limits. For people under 50 the limit is $19,000. If you’re over 50, you can contribute up to $25,000.
2019 American Opportunity Tax Credit
Are you or your children taking college classes? You can claim up to $2,000 on necessary college expenses like tuition and books, and 25% on the next $2,000. This adds up to a total of $2,500.
This may not sound like much, but every little bit helps- especially to a college student! These days, college student doesn’t mean someone between the ages of 18-22 anymore. Many adults are going back to school to get graduate degrees or switch careers.
Home Mortgage Interest
For most people, their home is the most expensive thing they own and they pay thousands of dollars in interest every single year.
The good news is you can reduce your taxes by itemizing the interest. The more expensive your home, the better your odds of this itemized credit being worth it.
Just make sure you do the math. For many people, the Standard Deduction is better than itemizing separate credits, such as this one. However, you may have enough credits to make it worth claiming this credit when combined with others.
Money you donate to a non-profit such as your religious organization or a charity can be claimed as a tax reduction. For some people, the charitable donations credit can be huge.
While it doesn’t make sense to donate just for the tax credit, that’s not the reason most people do. They give to these organizations to serve a good cause and make a difference in the world.
Need Help with Your Taxes?
The tax world can be messy and confusing sometimes. Do you need help with yours? Give us a call at 714-663-8000, we look forward to helping you navigate this tough time.