Last year, the COVID-19 pandemic significantly impacted many aspects of day-to-day life in the US, including tax season. While the 2022 tax season is expected to return to business as usual, there are still a few changes that Americans need to know – namely deductions. For many years, tax professionals have stressed to the American public the importance of deductions, as they are primarily where the majority of Americans lose money each year. This year, Prestige Tax Office hopes to offer Americans their expertise and advice and help taxpayers maximize their deductions by avoiding common deduction mistakes.
How to Avoid Missing out on Deductions
By far, the most common mistake Americans make on their taxes is not taking full advantage of their deductions. Unfortunately, to take advantage of deductions, individuals must track their expenses throughout the year as, without recipients and documentation, they cannot deduct expenses during tax season. To avoid missing out on deductions, Americans must first possess a basic understanding of deductions and what deductions they will most likely qualify for based on their lifestyle.
Prestige Tax Office tells readers that the three primary deductions all taxpayers should consider this season are charitable deductions, medical deductions, and business deductions.
Charity donations are one of the best tax-savings opportunities provided to Americans. Not only do charities benefit from donations and contributions, but taxpayers can know that their donation will help reduce part of all of their tax contributions on their tax returns.
In 2020, the Taxpayer Certainty and Disaster Tax Relief Act extended two charitable giving tax changes enacted by the Coronavirus Aid, Relief, and Economic Security Act (CARES). The Taxpayer Certainty and Disaster Tax Relief Act allows Americans to deduct up to 100% of their adjusted gross income (total income) minus other deductions already taken in qualifying charitable donations. Additionally, those who are taking the standard deduction may claim above-the-line deductions of up to $300 (or $600 for married filing jointly) for charitable contributions made exclusively in cash.
Last year, many Americans found themselves accumulating exorbitant medical bills and debt. For these Americans, Prestige Tax Office says they may find some relief come tax season. For the 2022 tax season, Americans are able to deduct any medical expenses above 7.5% of their adjusted gross income (total income minus other tax deductions). This means that any American who made $50,000 dollars in 2021 can deduct out-of-pocket any medical expenses above 3,750 this tax season. However, it is crucial to have itemized deductions in order to write off the medical expenses during a tax return.
Last year, many Americans were forced to seek out new employment thanks to the COVID-19 virus, and with historically few businesses hiring, many Americans turned to self-employment. For the many Americans who started their own businesses last year, Prestige Tax Office stresses that you are eligible for a wide variety of deductions this tax season including, home office deductions, travel deductions, internet, and phone bills deductions, health insurance premium deductions, meals deductions, and vehicle use deductions. However, it is essential to note that these deductions are availed exclusively for those who are self-employed and will be filling out a 1040 form in April. Unfortunately, this means that workers whose employers sent them home to work remotely cannot claim the home office deduction.
Taxpayers who are interested in mastering the tax preparation process, maximizing their returns, or becoming income tax preparers are in luck. Prestige Tax Office understands that there are many aspects of tax preparation that are best taught by a professional, which is why Prestige Tax Office provides an in-depth tax training program designed to help Americans understand the complex facets of tax preparation and tax law. During the tax training program, taxpayers will learn various tax software step by step and be walked through the entire process with one of Prestige Tax Office’s experienced tax professionals. Prestige Tax Office recognizes that when it comes to learning any new skill, every individual needs attention and mentorship in order to grasp key concepts. This is why the reputable tax office provides tax trainees the space required to ask questions and receive immediate answers throughout their training. Prestige Tax Office professionals know that once the training is complete, trainees may need to ask a few follow-up questions come tax season. The tax office encourages frequent follow-ups with tax trainers and trainees and stresses that their professionals remain available to answer all questions and concerns following a tax training. Once the course is complete, all participants should be ready to become income tax preparers!