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12 of the best tax deductions in 2020

por Fern Mahony (2020-02-17)


Wonderful healthy celeryid="article-body" class="row" section="article-body"> Getty Images Nothing can be said to be certain, Benjamin Franklin once wrote, except death and taxes. While you can't stop death, you can reduce how much you owe in taxes -- if you qualify for these benefits.

There are loads of tax deductions you can claim on your tax bill, which can either reduce what you owe or increase your tax refund. You're probably already familiar with some of the most common write-offs, like property taxes, but there are many more deductions that are easily overlooked. Here are some of the best tax deductions you might be able to claim. (These deductions are aimed at those who are not self-employed -- those folks have an entirely different set of tax write-off options.)

Read more: The best tax software for 2020: TurboTax, H&R Block, TaxSlayer and more

1. American Opportunity Tax Credit
The AOTC is for first-time college students for their first four years of college or other higher education. If you're pursuing a degree or otherwise going to college and haven't had a felony drug conviction at the end of the tax year, you could qualify. 

Your modified adjusted gross income must be $80,000 a year or less to claim the full credit. If your income is between $80,000 and $90,000 you'll still receive credit but at a reduced amount.

2. Lifetime Learning Credit
While the AOTC is for first-time college students, the Lifetime Learning Credit is for others pursuing higher education. To claim this credit, you, your spouse, or your dependent must pay for qualifying higher education costs. You can't claim if your MAGI is more than $67,000 and it's slowly being phased out for those who make between $57,000 and $67,000.

3. Earned Income Tax Credit
If you make low-to-moderate income, the Earned Income Tax Credit reduces the amount of tax you owe. Or it could give you a refund (or increase it).

The IRS typically sends letters to households that might qualify for EITC. You'll need to verify your claim, file a tax return and possibly earn the credit for previous years. Use the EITC Assistant to see if you qualify.

4. Child and Dependent Care Credit 
If you care for a child or another dependent in your household, you could claim this credit. The total expenses can't exceed $3,000 for one individual or $6,000 for two or more dependents. If you treasured this article and also you would like to be given more info regarding Dr. Visschers valuable expertise in cosmetic nicely visit our website. Expenses are directly related to ensuring a child or dependent's well-being and protection, especially if they are not able to physically and mentally care for themselves.

5. Saver's Credit
If you make eligible contributions to your Individual Retirement Account or your employer-sponsored retirement plan -- like a 401(k) -- you may qualify for the Saver's Credit. You must be 18 years of age or older, not a full-time student and can't be claimed as a dependent on another person's tax returns. The credit rate varies depending on your adjusted gross income, but you won't earn anything if you earn more than $64,000 if you're married filing jointly or more than $32,000 as another filer.

6. Child Tax Credit
The Child Tax Credit could save you up to $2,000 for each qualifying child. Each child should be under 17 years of age and must be your:


Child

Stepchild

Foster child

Sibling

Step-sibling

Half-sibling

Grandchild

Niece/Nephew

Or adopted child
The child must be claimed as a dependent on your tax return. 

Read more: How to estimate your 2020 tax refund

7. Adoption tax credit
There are tax benefits in the form of an adoption tax credit that is directly for adoption-related expenses. The credit covers adoption and fees, court costs, attorney fees, traveling expenses and other expenses that are directly related to the adoption. As of 2018, the maximum dollar amount is $13,810 per child.

8. Medical and Dental Expenses
Even with insurance, you might have to pay for medical expenses out of pocket. You can deduct these expenses for you, your spouse or any of your dependents, as long as the total amount exceeds 7.5% of your AGI. Possible expenses include:


Fees to doctors, dentists, specialists, mental health professionals and even nontraditional medical practitioners.

Hospital care, residential nursing home care and acupuncture treatments.

Treatment for alcohol, drug addiction, smoking-cessation programs and prescription drugs for nicotine withdrawal and related addiction needs.

Payments for insulin, eyeglasses, contact lenses, hearing aids, crutches, wheelchairs, guide dogs and other service animals.
Funeral expenses, over-the-counter medications and most cosmetic surgery can't be deducted.

9. Residential Energy Credit
For the energy-efficient homeowner, you could claim a residential energy credit. The credit includes:


Energy-efficient windows and doors

Roofs

Insulation

Energy-efficient heating and AC systems

Water heaters

Biomass stoves
Qualifying solar electric property and solar water heaters are also included. 

As of 2017, the credit has a lifetime limit of $500, but different improvements carry different weights to earn the credit.

Read more: Electric-car tax credit issued improperly to thousands, audit finds

10. Student Loan Interest Deduction
Paying back your student loans can be daunting and at times expensive, but you can catch a little break come tax time with the student loan interest deduction.

If you paid interest on a qualifying student loan for you, your spouse or another dependent, you may qualify for the tax credit. You can claim the deduction as an adjustment to your income rather than an itemized deduction. You'll be able to deduct either $2,500 or the actual amount of interest you paid during the year, whichever is lesser.

11. Health Savings Account contribution
If you have a health savings account, contributions made to your HSA are not subjected to federal income tax. You can also claim a tax deduction for making contributions to your HSA. 

Contribution limits vary by your high-deductible health plan, your age and the date you become eligible.

12. Charitable Contribution Deductions
Charitable contributions are one of the most common ways to get a tax deduction. You can deduct contributions of money or property you donated to qualified organizations, but you'll need to itemize your deductions. 

In most cases, you can deduct up to 50% of your AGI, but there are some cases where you might be limited to 20 or 30%.

Originally published last year.

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