A tax write-off is any expense that’s deductible on a business or individual tax return. It’s an expense you can either fully or partially take from your taxable income which lessens how much you’ll end up paying the government during tax season.
If you know what you’re able to deduct, you can make taxes work in your favor, lowering your tax bill and maybe even increasing your refund.
But what can I write off?
It’s important to know what can and cannot be deducted to prevent headaches during tax season.
A few common write-offs may include:
- Charitable contributions: These may qualify if you contributed monetarily to a qualified charity organization and is considered an itemized deduction.
- Business expenses: Certain expenses to operate and run your business may include interest, rent, using your car and home for business, and business meals.
- Student loan interest: Good news for student loans! If you’re making payments on your student loan debt and meet the income requirements, you may write off up to $2,500 of the interest paid on your loan.
These are just a few examples of tax write-offs. For a more comprehensive list, visit the IRS and their tax page.
So what can I NOT write off?
Of course, not everything can be written off (though that would be nice!).
Here are a few examples of what probably cannot be deducted:
- Pet care services: While Fido is super cute, he likely doesn’t qualify as a dependent on your taxes. But with the amount of food he eats, maybe he should.
- Home Maintenance/Improvements: Making updates to your home probably doesn’t qualify as a tax write-off. The only exception is if you’re making updates to the home office and can prove so through receipts.
- Homeowner’s insurance: It is very unlikely your tax premiums will qualify as a tax writeoff.
How do write-offs affect my taxes?
While tax write-offs lower how much you owe and help you qualify for a larger tax refund, any false claims or misrepresentations can add up incorrectly. All those missteps could make tax season drag on longer – plus, you could face penalties on any unpaid amount.
If you’re unsure if something is taxable, consider going over your taxes with a tax pro to ensure you’re claiming the right things. Be sure you qualify for a deduction before trying to claim it on your tax return. The IRS may not allow certain tax write-offs if they decide it doesn’t follow the tax code.
If you need some help with your deductions and other tax questions, we’re here to help! Let’s talk about how World can give you some added clarity during tax season.