3 Tax Deductions you May be Eligible for, plus 3 Bonus Deductions
Video Transcript:
0:00 Hi everyone, thanks for stopping by. This is Phil with Foundation Wealth Planning and I've got a tax topic today. This is a very common question that I get and something that I think will help you out a lot.
0:13 So what I'm going to do today is I'm going to give you three very powerful deductions that are available to everyone and then I'm going to give three bonus ones that are a little bit more specific.
0:22 And so if you like the video please, like it, subscribe, you know, wherever you found it, share it, like it, all that good stuff.
0:30 And also if you wouldn't mind if you want to send me an email or send me a message on whatever platform you found me, I'd love to get some more topics to make some more videos on and be a resource out there.
0:41 So without any further ado, let's get to it. So what I'm going to talk about today is going to be the above, the line deductions.
0:51 Okay, so most people think about taxes, about, you know, how they're going to itemize is kind of the most common way people think about it.
0:59 So there are two different ways that you can get deductions on your taxes and lower your tax rate. There's a few that are above the line meaning you are eligible for them regardless of, you know, if you meet certain criteria.
1:13 So if you're below the line, that might be the usual way to start it, those would be any deductions that are in a certain category above the standard deduction, right?
1:24 So most people are taking the standard deduction. So things that fall in there that people think they're going to a deduction for would be things like mortgage interest and, you know, charitable contributions.
1:36 Those are probably the two most common. And you're not getting any benefit on your taxes for those if you are not itemizing your taxes.
1:45 Okay? So and before I get any further, also would like to point out that this is for educational purposes only.
1:51 Please talk to a tax professional to make sure that your taxes are done appropriately. But I think when we're looking at these specific things that are going to help.
2:01 So if you. Do it above the line of the thing, you can get that whether you itemize your deductions or not.
2:06 So some of the most powerful deductions that you can take. Would be retirement contributions. So the IRA, 401k, SIMPLE IRA, SEP IRA, (etc).
2:17 If you, if you deduct into those, as long as you, you know, meet certain income requirements when you talk about IRAs and things like that, those are above-the-line deductions.
2:26 That you would be able to get whether you itemize your taxes or not. Now caveat, in addition, see in the other video that I have about why you would want to look at potentially doing a Roth versus a traditional and all that stuff.
2:38 So there's, there's certainly some things to look at, but if you're going to do a pre tax contribution, they are powerful because you can take them without needing to itemize your taxes.
2:47 The other one that's huge would be an HSA contribution. So if you have an HSA account and you're putting money in for future medical expenses, you can take that deduction on your contribution regardless of whether or not you itemize. (Thats a) massive one.
3:03 The other one that I don't love that is so popular, but it is would be student loan interest deduction. So again, if you are paying student loans and you have interest on those, those are
3:14 an in above-the-line deduction*. Again, I'll put the caveat out there. I've seen other videos that I've done about debt.
3:20 Don't love it. Get it paid off. Don't keep that debt around just for the deduction. But while you have it, you can take that as a deduction without needing to itemize.
3:29 So again, those are the three most powerful ones that you're going to get regardless.
A few bonus ones. If you're a teacher and you have to go
3:40 buy supplies for your classroom. If you are filing, single you can deduct up to $250. Again, that's above the line whether or not you're itemizing.
3:49 You're filing jointly. I believe it's up to $500**. So again, verify that with your tax professional. But really powerful one there.
3:55 If you're if you need to get some school supplies, check what qualifies. But that's a cool one to look out for.
4:01 Of course, if you own a business, you’re self-employed, you got a sole proprietor business those expenses that are needed to run the business, of course, can be done above the line.
4:12 Again, that's, that's a little bit more nuanced. Make sure you're talking to tax person to get that all squared away.
4:19 But that doesn't apply to everybody. The other one too is if you are in the military and you are moving.
4:24 There are certain expenses that you can deduct above the line as well. So keep. Keep that in mind if you're getting moved around in the military, make sure you're getting clarity on what you can and can't. Keep your receipts and that can really help on your taxes for that year.
4:36 So I hope that helps. Again, if you have any other questions on that and you want to chat with me about it, I would love to help. Talk to a tax advisor
4:45 if you got other specific questions and if you've got other questions that are related to, you know, financial topics, please send them to me.
4:54 I would love to see if I can do a video on it and help provide a little bit of value out there.
4:58 So again, it's Phil with Foundation Wealth Planning. I'm a CERTIFIED FINANCIAL PLANNER™ and would love to help you if you have any questions.
5:05 Thank you and God bless
*A few notes that I missed saying while recording this. First, student loan interest deductions are subject to income restrictions. IRAs have income restrictions as well.
**The $500 deduction for joining filers only applies if both of the joint filers are teachers purchasing supplies for their classrooms.
Phil Francois, CFP®
Foundation Wealth Planning
phil@foundationwealthplanning.com
https://www.foundationwealthplanning.com/