When you think of filing your taxes, it is easy to put things into a neat little bucket of income and expenses. Income and expenses are integral to filing your taxes; however, there are other considerations that don’t neatly fit into these categories, and must be considered for your tax returns.
Have you invested in an IRA? If you have chosen to invest into an IRA retirement option, pre-taxed, then you may be eligible for a deduction from reducing your gross income. There is a cap on how much can be claimed on your Federal income taxes ($6,000 - $7,000 depending on age and other variables), but including your IRA investments can lower your tax bill.
Another IRA option any are unaware of is “spousal IRA deposits.” This option allows you to participate in your spouse’s IRA and experience the same benefits as an individual IRA on your tax return. The benefits are more significant since it takes into consideration the income of you and your spouse, so the taxable contributions could range up to $14,000.
Health Savings Accounts (HSA)
Many companies offer the option of an HSA for medical benefits today. This is a great option to take care of anything from your co-pays at doctor’s visits to prescriptions. Like other investments, you have the option to contribute what you’d like to this account. The contributions are tax free and also provide you with an option for additional deductions from your taxes. Depending on whether you are filing individually or for a family, you can claim up to $7,300 on your taxes with this option.
With student loan debt reaching nearly $2 trillion nationally, there are many Americans that bear the load of one or multiple student loans. There are a few things to consider when it comes to your student loan. Claiming the interest on your student loan is no longer automatic. Changes in regulations after the pandemic in 2020 adjusted this option for student loan borrowers, particularly those with Federal loans. That does not mean that it is no longer available, but it varies depending upon your student loan servicer and is a benefit you can take advantage of with a commercial lender. It is advised that you contact them to determine if you are eligible before filing your taxes.
Another thing to keep an eye out for when filing your taxes is the government’s current initiative on loan forgiveness. While the federal government is still in litigation to determine the full offering for student loan borrowers, it has been determined that loan forgiveness will not likely count toward your income and therefore, raise your taxes.
With the crypto wave, many have experienced great investment gains, but there have also been some great losses as crypto is still a very risky investment option. If you are among the many that experienced profit losses due to cryto investments, there may be some relief in sight by way of your tax return. There are a lot of variables to consider when deciding if you can claim tax benefits from your crypto losses, but under the right circumstances, there may be an opportunity to subtract up to $3,000 from your gross income. It is also important to note that whether you’ve experienced a gain or lost with your crypto investment, the Federal government does require that you file a form, “1099-B”.
There are many variables to consider when it comes to savings, investments, and your taxes. These variables can positively or negatively impact your tax returns. To ensure you are getting the maximum benefit from your savings and investments, it is recommended that you consult a professional so as not to miss any possible deductions or payments that need to be made as a result.
With 20 years of experience working with individuals and small businesses to manage the taxes, VAAS Professionals can partner with you to ensure no opportunity is left unturned when filing your taxes each year. Contact our team to schedule an initial consultation to discuss how your savings and investments will impact your tax returns.