Spring is just around the horizon. Soon, the snow will melt from the landscape and flowers will pop up left and right. Tax season is also popping up, so it’s time to take out your paperwork and prepare for drudgery.
Here’s some good news, though. You don’t have to brace yourself for Uncle Sam snatching away your hard-earned money. Tax deductions can do you a world of good if you qualify for them, that is.
If you want to minimize the amount you owe the government, you’ve come to the right place. We collected eight tax deductions to help you save cash when you file. This is good to keep in mind when considering all the tax law changes in 2021.
1. Did you never get your stimulus payment? Try this
When the third stimulus payment rolled out, some people never received the total amount. Good news: You could be eligible for the Recovery Rebate Credit. When you file your 2021 tax return, make sure to keep this in mind.
2. Mother Earth thanks you, as does the government
If you’ve set your home up to be energy efficient, you could get a tax break this season. This covers everything from roofs, doors and windows all the way to heating and AC systems. If you’re using energy most efficiently, claim a residential energy credit this year.
3.Try this if you have children or dependents
Caring for others pays off. You can claim up to $8,000 for one dependent and $16,000 if you’re caring for two or more people. You’ll just need to have a good overview of your finances.
Take note of how much you spend on daycare, afterschool care and even how much you spend on gas driving your kids to and from care programs. Don’t forget to write down the costs of babysitters and nannies, too.
You’ll need those numbers to fill out Form 2441, which you can attach to your Form 1040 tax return. Just make sure you’re writing down the care providers’ Taxpayer Identification Numbers, as well as their name and address. (If you don’t know this information, use Form W-10 to get it.)
4. Get a deduction by contributing to your HSA
Money that goes to your health savings account won’t be included in your federal income tax. If you contributed to your HSA in 2021, you could get a tax deduction on your spending. Of course, there are limits that vary depending on your plan, age and other factors.
Official sources haven’t shared concrete thresholds for this tax season, but that will change later this year. In the meantime, here’s a draft you can use to get an idea of what it may look like.
5. Good news for anyone with student loans
Did you pay interest on any loans? Whether your loans are private or from the government, you may qualify for a deduction. This even works if you paid for a loan that a spouse or dependent took out. Here’s how to find out if you qualify.
6. Write off medical, dental and mental health expenses
Health visits can cost an arm and a leg, whether you’re seeing a dentist or mental health professional. You can also cover eyeglasses, hearing aids, insulin, and even acupuncture payments. If you went into treatment for addiction or paid for hospital care, you could deduct these expenses.
There’s one catch, though: You can only get a break if the total amount you spend is more than 7.5% of your AGI or adjusted gross income. Here are a few ways to find out your AGI.
7. Use the lifetime learning credit
If you’re paying for the cost of higher education, apply for this credit. This doesn’t only apply to courses taken in pursuit of a degree. You can also use it to help pay for classes for job skills. You can get up to $2,000 for each tax return you file.
8. Generosity pays off
Last year, did you loosen your purse strings in pursuit of goodwill? Then you can take advantage of a long-standing tax deduction. If you gave money or property to a qualified organization, you could deduct that from your tax return.
These eight strategies can serve you well once it’s time to sit down and break out the calculator. Another way to help yourself is by signing up for software that can cut down on costly human errors. We recommend Kim’s sponsor, Oracle NetSuite. It’s helpful to everyone, but small businesses will find it to be a lifesaver.
Give yourself a gift to start the new year off right
If you’re a business owner, you don’t need me to tell you running a business is tough. Don’t let QuickBooks and spreadsheets slow you down, and stop paying for multiple systems that don’t give you the information you need when you need it. It’s time to upgrade to NetSuite by Oracle, the world’s No. 1 cloud business system.
NetSuite gives you visibility and control over your financials, HR, inventory, e-commerce and more — all in one place — instantaneously. Whether you’re doing a million or hundreds of millions in revenue, save time and money with NetSuite. Join the over 24,000 companies using NetSuite right now!
Let NetSuite show you how they’ll benefit your business with a free product tour at NetSuite.com/Kim.