List of income tax deductions for the tax year 2020-21. | Tax saving opportunities (2023)

Tax planning is an important part of a financial plan. Whether you are a salaried individual, a professional or an entrepreneur, proper tax planning can save you some money on taxes.

The Indian Income Tax Act allows certain tax benefits/exemptions that can be claimed to save tax. You can deduct tax credits from your gross income and your taxable income is reduced accordingly.

New Income Tax Regime Proposed in Budget 2020 Budget 2020 has sparked a new debate on what income tax rates are beneficial for taxpayers(New tax regime versus the old one). The taxpayer can opt for it by waiving 70 exemptions from income tax.

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  • 15 important budget proposals for 2021 related to your personal finances

Latest Income Tax Rates FY 2020-21 / AY 2021-22

Finance Minister Nirmala Sitharaman proposed in the budget for the period 2020-21. the offer of an optional lower income tax rate for individualsnew tax cards15% and 25% plus license plate fees of 10%, 20% and 30%.

In case you wish to claim your IT deductions and exemptions, then your income will be taxable at the old rates of income tax for 2019-20.(as below);

Related article:New income tax rates compared to the old tax regime | Which is the best AY 2021-22?

Income tax deductions according to the new fiscal regime FY 2020-21

Individuals who choose to pay tax under the proposed new reduced income tax regime will have to give up almost all of the tax benefits they claimed under the old tax structure.

Below is a list of the main exemptions and tax reliefs that are not available to taxpayers if they opt for the new regime;

  • Deductions commonly claimed under section 80C will disappear.
    • Deductions under Section 80C claimed for provident fund contributions, life insurance premiums, school fees for children and various special investments like ELSS, NPS, PPF cannot be availed.
  • subsidy for renting an apartment
  • Departure travel allowance
  • Standard deduction of Rs.50,000
  • Deduction available under section 80TTA(Deduction related to interest on deposits in savings accounts)is 80 TTB(Deduction related to interest on deposits for the elderly).
  • Kamate na podignute hipotekarne kredite (članak 24.).
    • In the new tax regime, compensation for lossIncome from home ownershipis not allowed. However, you can still use it to set aside rental income for a rental property.
  • Deduction for health insurance premium under section 80D will also not be charged.
  • Deduction of tax on interest paid on education loans will not be enforceable - section 80E.
  • Charitable gift tax benefit available under section 80G will not be available

Therefore, all Chapter VIA deductions(such as section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA , etc.)will not be required by those who opt for the new tax regime.

The above items are part of a total of 70 tax benefits and exemptions that will not be available under the new tax regime.

Income tax deductions and exemptions allowed under the new tax regime AY 2021-22

Section 80CCD (2)

Employer's contribution on behalf of employees in pension schemes registered as EPF, NPS and/or Super Annuation Account can be claimed up to a limit of Rs 7.5 lakh.

(Video) 9 HUGE Tax Write Offs for Individuals (EVERYONE can use these)

The employer can deposit an amount equal to 12% of the employee's monthly basic salary into his EPF account. Likewise, the employer can deposit an amount equal to 10% of the employee's basic salary to the NPS Tier I account. A maximum of 1.5 lakh rupees tax free in a financial year can be paid into the pension account by the employer.

The budget has capped tax-free pension account, NPS and EPF contribution by employer to a maximum of Rs 7.5 lakh in a financial year. Further, the budget states that any interest or earnings earned on excess contributions will also be taxable in the hands of the employee.

Received interest on the post office account

Interest received on post office savings account balance is exempt up to Rs 3500 under section 10(15)(i) of the Income Tax Act.(Relief up to Rs 7000 for Joint Savings Account).

Advice& Other withdrawal benefits

Gratuities are tax-free up to Rs 20 lakh for life for non-government employees. For public officials, all tips received are tax-free, regardless of the amount received.

Benefits below up to certain limits(if any)are also allowed under the new tax regime;

  • Pension change
  • leave moneyretired
  • retention fee
  • advantages of VRS
  • Benefits of NPS Withdrawal
  • scholarships
  • Premium payments initiated in the public interest

Interest on EPF account

Interest received from EPF accounts remains tax-free under the new tax regime, as long as they do not exceed 95.0%.

Interest and maturity amount received in Sukanya Samriddhi Account and PPF Account are tax free under old and new tax regimes.

Tax reduction up to Rs 12,500 u/s Section 87A

Individuals with taxable income up to Rs 5 lakh will be eligible for itreduction of tax under section 87Aup to Rs 12,500, making no tax payable under the new tax regime.

Related article:Discount under Section 87A AY 2021-22 | Is Sec 87A tax rebate available under the new tax regime?

transportation fee

You can also claim income tax exemption for transport allowances, travel allowances and other allowances approved by your employers under the new tax regime.

List of income tax deductions for the tax year 2020-21. | Tax saving opportunities (3)

Income tax deductions available under the old tax regime for FY 2020-21. / AY 2021-22

Article 80c

The maximum tax exemption threshold under Section 80C is only Rs 1.5 lakh. The various types of investment or expenses that can be claimed as tax deductions under section 80c are as follows;

  • PPF(Public pension fund)
  • EPF(Pension fund of employees)
  • Five-year bank or postal tax savings deposits
  • NSC(national savings certificates)
  • ELSS Mutual Funds (Savings schemes linked to shares)
  • school fees for children
  • SCSS(Postal savings program for the elderly)
  • Main repayment of the housing loan
  • Income tax relief from NPS (National Pension Scheme) is currently only available for Tier 1 deposits(FG 2018.-19.). Contributions of Government Servants (only) at Tier II NPS will also be covered under Section 80C for deduction of up to Rs 1.5 lakh for income tax purposes, with a lock-in period of three years. It's April 2019.
  • Life insurance premium (Ler: 'The best insurance terms')
  • Sukanya Samriddhi Account Deposit Scheme

Section 80CCC

Contribution to LIC Annuity Plan(Life Insurance Corporation of India)or any other life insurance company to receive pension from the fund is considered a tax benefit. The maximum tax deduction allowed under this section is Rs.1.5 Lakh.

Section 80CCD

An employee can contribute to pension schemes notified by the government(such as the National Pension Plan – NPS). Contributions can be up to 10% of salary(paid people)and an additional tax credit of Rs 50,000/s 80CCD(1b) has been proposed in the 2015 budget.

According to the 2017-18 Budget, self-employed(individual who is not from the salaried class)can contribute up to 20% of their gross income and the same is deductible from taxable income under Section 80CCD(1) of the Income Tax Act, 1961.

(Video) Rental Property Tax Deductions | Investing for Beginners

To claim this deduction, the employee must contribute to a government-recognised pension scheme such as NPS. The 10% salary threshold is only applicable to salaried individuals and gross income is applied to non-salaried individuals. The definition of salary is just 'cost allowance'. If your employer also pays contributions to the pension plan, the amount of the contribution(10% of salary)up to Rs 7.5 lakh can be claimed as tax credit under Section 80CCD(2).

The Center allocates 14% of the basic salary to the civil servants' pension fund, compared to 10%. It's April 2019.

Contributions 'Pansion Atal Yojana' are eligible for tax deduction under section 80CCD.

Note that the total deduction is atsection 80C, 80CCC i80CCD(1) together cannot exceed Rs.1,50,000/- for the financial year 2020-21. Additional tax deduction of Rs 50,000/s 80CCD(1b) is above this limit of Rs 1.5 lakh.

Section 80D

In the Union Budget 2018, the Government of India has made the below changes regarding deductions available for health insurance and/or treatment. The same provisions apply for the fiscal year 2020-21.

The restrictions below are applicable for the 2020-2021 fiscal year. (or) the assessment year (2021-2022) u/s 80D.

Preventive health check-up(medical examinations)expenses up to Rs 5000 per household can be claimed as tax deductions. Remember, this does not exceed the individual limits explained above.(Family includes: self, spouse, parents and dependent children).

NRIs can also claim a tax deduction of 80D.

Article 80DD

You can claim up to Rs 75,000 for the medical expenses of your dependents(spouse, parents, children or siblings)who have 40% disability. A tax deduction limit of up to Rs 1.25 lakh can be availed in case of severe disability.

To claim this deduction, you must fileForm number 10-IA.

Section 80DDB

individual(less than 60 years old)can claim up to Rs 40,000 for treatment of certain critical illnesses. This can also be claimed on behalf of dependent family members. Limitation of deduction of tax under this section for senior citizens and senior citizens(over 80 years old)it was revised to 1,00,000 rupees before FY 2018-19.

To claim tax benefits under Section 80DDB, an individual must obtain a 'medical certificate' or 'prescription' from a professional working in a public or private hospital.

Article 24 (B)(Loss under the heading Income from household property)

  • From the tax year 2017/18. tax relief on repayment of a loan for a second house amounts tolimited to 2 lakh rupees per annumonly(even if you have multiple houses the limit is still only Rs 2 Lakh and the maximum limit is not per house ownership).
  • Unclaimed loss, if any, will be carried forward to offset home ownership income for the next 8 years. In most cases it can be treated as 'dead loss'.
  • I believe this is a big blow to investors who bought multiple homes with home equity loans only with the intention of saving on taxes.
  • During the 2016-17 tax year, interest paid on your home loan qualifies for the following tax benefits; City tax paid, 30% of annual net income(standard deduction)and the interest paid on the loan taken out for that house is allowed as a deduction.
  • After these deductions, your rental income can beANYTHINGorNEGATIVEand it is called 'loss of ownership of the house' in the latter case.
  • Currently, this loss can be offset against other sources of income, such as salary or business income, etc., which helps you reduce your tax liability significantly.
List of income tax deductions for the tax year 2020-21. | Tax saving opportunities (6)

There is no fictitious rent taxIndependent second homeavailable. So you can hold 2independent propertiesand you don't have to show other SoP rental income as fake rent. This is valid from the fiscal year 2019-20.

Section 80E

If you take a loan for higher studies(after graduation), you can claim tax deduction under section 80E for the interest you pay on your education loan. This loan should have been taken out for higher education for you, your spouse or your children, or for a student for whom you are legally responsible. Repayment of the principal of an education loan cannot be claimed as a tax deduction.

(Video) Top 10 Tax Write Offs for Rental Property: 2023 Deductions

There is no limit on the amount of interest you can claim as a deduction under section 80E. The deduction is available for a maximum period of 8 years or until interest is paid, whichever comes first.

Section 80E is also available for NRIs.

Section 80EEA

In addition to tax benefits under Section 80C and 24b, an individual can claim up to Rs 1.5 lakh under Section 80EEA for the tax year 2019-20. The same shall continue for FY 2020-21 or AY 2021-22, subject to the conditions stated below;

  • The housing loan should have been sanctioned between April 1, 2019 and March 31, 2020.
  • The amount of consideration for the property should not exceed 45 Lakhs.
  • The taxpayer must not own any other residential property on the date of sanction of the loan.
  • This tax relief will be available from April 1, 2020(GY 2020-21)and until the end of the housing loan term(Close).
  • The total interest deduction is now Rs. 3.5 lakhs(Rs 2 lakh +
  • 1.5 lakh rupees).

Note that deduction under Section 80EEA is available only for home loans from approved banks and financial institutions. Under Section 24, even interest paid on home loans from friends and relatives is eligible for tax relief.

To claim Section 24 tax relief, you must take possession of your home(interests paid before assuming office are deducted for the next 5 years in 5 equal installments). Sections 80EE and 80EEA do not impose any requirement for possession or completion of construction. Therefore, section 80EEA provides immediate tax relief even if you have purchased an under-construction property.

Both Resident Indians and Non-Resident Indians (NRIs) can claim a deduction of 80 EEA in the US.

Section 80EEB

A tax deduction of up to 1.5 lakh rupees can be claimed on interest paid on loans taken for the purchase of electronic vehicles.

Section 80G

Contributions to certain provident funds and charities can be claimed as a deduction under Section 80G of the Income Tax Act. This deduction can only be claimed if the contribution is paid by check, money order or cash. Contributions in kind such as food, clothing, medicine etc. are not eligible for deduction under section 80G.

Donations made to any political party can be claimed under section 80GGC.

In the fiscal year 2017-18. the deduction limit under section 80G/80GGC for cash donations has been reduced from the current Rs 10,000 to just Rs 2,000.

If you want to donate some funds to a political party of your choice, you can do so in cash up to Rs.2000. Also, you cannot donate a monetary amount. This can be done byElective positions.

Section 80GG

The amount of tax deduction under 80GG is Rs 60,000 per annum. Section 80GG is applicable to all individuals who do not own a residential home and do not receive HRA(Rent subsidy).

The scope of the tax deduction will be limited to the lesser of the following;

  • Paid rent less 10% of the total adjusted rent.
  • 5000 BRL per month.
  • 25% of the total income.

Article 87A- Tax return

Individuals with taxable income up to Rs 5 lakh will be eligible for itreduction of tax under section 87Aup to Rs 12,500, whereby no tax is payable under the old and new tax regimes.

(Video) 8 Tax Writeoffs for Homeowners: Deductions & Credits List For 2023

Section 80 TTA and new Section 80TTB

For seniors, interest income earned on demand deposits and recurring deposits(bank/post office schemes)will be exempted up to Rs.50,000(The limit for FY 2017-18 was up to Rs 10,000). This deduction can be claimed under the new Section 80TTB. However, no deduction can be claimed under existing 80TTA if tax benefit 80TTB is claimed(limit for FY 2017-18 and FY 2018-19 u/s 80TTA is Rs 10,000).

Section 80TTA of the Income Tax Act provides for deductions on interest income earned from bank savings deposits up to Rs 10,000. Beginning with the 2018-2019 tax year, this benefit will not be available to late filers.

  • YesTDS up to Rs 40,000 on interest incomebank/postal deposits(FY 2018-19 TDS u/s 194A limit is Rs 10,000). Please note that without TDS there is no tax liability. Interest income on deposits (FD/RD) is still taxable income.

Interest income on corporate deposits does not benefit from this section. This means that seniors will not receive this benefit from interest incometime deposits of companiesnas/ 80TTB.

Section 80U

This is similar to section 80DD. A tax deduction is allowed for taxpayers with physical and mental disabilities.

Standard deduction of Rs.50,000

OStandard deductionwith Rs 40,000 for FY 2018-19. has been increased to Rs 50,000 for FY 2019-20. The same applies to the fiscal year 2020-21.

Related article:Standard Deduction Treatment of Rs 50,000 Under New Tax Regime (AF 2020-21 / AY 2021-22)


It is wise to avoid last minute tax planning. do not invest inlow yield life insurance policiesor on any other financial products just to save taxes. It is best to plan your taxes based on your financial goals at the beginning of the financial year itself. Plan your taxes now instead of waiting until late December 2020 (or) January 2021.

As mentioned, under the new tax regime, individuals can choose to pay tax at reduced rates without claiming various tax exemptions and deductions.

Therefore, you will have to calculate your tax liability underold and new tax regimebefore deciding which one is more useful. Although the new regime seems simple as there are no exemptions, if you have already committed to recurring tax saving instruments, you may still want to take advantage of the exemptions and be taxed under the old tax regime.

You can "compare tax under the old and new regime" usingthis official online tax calculatorbrought by the e-Archive portal of the IT department.

Remember: it's okay to pay some taxes when you can't save or invest in the right financial products. But, don't invest just to save TAXES. The cost of buying the wrong financial products can outweigh the cost of taxes. Tax planning is not a goal, but a tool. Remember that "tax planning in itself is not financial planning".

I believe the above list is useful for your tax planning needs. Please note that these income tax exemptions are applicable for the financial year 2020-2021(or assessment year 2021-2022).

Continue reading:

(Video) Tax Strategies for High Income Earners to Help Reduce Taxes

  • Income Tax Exemption vs. Tax Deduction vs. Tax Rebate vs. TDS | The main differences
  • How does income tax monitor high-value financial operations?


List of income tax deductions for the tax year 2020-21. | Tax saving opportunities? ›

The standard deduction for the 2021 tax year is $12,550 for single taxpayers, up $150 from 2020, and $25,100 for married couples, up $300 from 2020. The standard deduction is even higher if you're 65 or older.

What are the standard deductions for 2020 and 2021? ›

The standard deduction for the 2021 tax year is $12,550 for single taxpayers, up $150 from 2020, and $25,100 for married couples, up $300 from 2020. The standard deduction is even higher if you're 65 or older.

How do you qualify for American Opportunity Tax Credit? ›

To be eligible for AOTC, the student must:
  1. Be pursuing a degree or other recognized education credential.
  2. Be enrolled at least half time for at least one academic period* beginning in the tax year.
  3. Not have finished the first four years of higher education at the beginning of the tax year.
Feb 16, 2023

What are two tax deductions that lower your taxable income? ›

An effective way to reduce taxable income is to contribute to a retirement account through an employer-sponsored plan or an individual retirement account. Both health spending accounts and flexible spending accounts help reduce taxable income during the years in which contributions are made.

What deductions are allowed for 2020 taxes? ›

Itemized Deductions
  • Standard deduction and itemized deductions.
  • Deductible nonbusiness taxes.
  • Personal Property tax.
  • Real estate tax.
  • Sales tax.
  • Charitable contributions.
  • Gambling loss.
  • Miscellaneous expenses.
Apr 24, 2023

What are the IRS standard deductions for 2020? ›

For single taxpayers and married individuals filing separately, the standard deduction rises to $12,400 in for 2020, up $200, and for heads of households, the standard deduction will be $18,650 for tax year 2020, up $300.

Are there any deductions you can take without itemizing? ›

Health Insurance Premiums for the Self-Employed

In addition to half of the self-employment tax, business owners are also allowed to deduct amounts they pay for health insurance, even if they don't itemize their taxes.

Are my insurance premiums tax deductible? ›

Health insurance premiums are deductible on federal taxes, in some cases, as these monthly payments are classified as medical expenses. Generally, if you pay for medical insurance on your own, you can deduct the amount from your taxes.

Should I keep grocery receipts for taxes? ›

Accurate record-keeping: Saving grocery receipts helps ensure accurate financial records, making it easier to calculate revenue, expenses, and taxable income. Tax deductions: Proper documentation of business expenses, including grocery receipts, can help a business claim tax deductions and reduce its tax liability.

How do I know if I received the American Opportunity or HOPE Credit? ›

If you paid qualified educational expenses during a specific tax year to an eligible intuition, then you will receive Form 1098-T. Colleges are required to send the form by January 31 each year, so you should receive it shortly after that. Some colleges may make it available to you electronically.

Who Cannot claim American Opportunity Credit? ›

Who cannot claim an education credit? You cannot claim an education credit when: Someone else, such as your parents, list you as a dependent on their tax return. Your filing status is married filing separately.

What is the $2000 tax credit? ›

The child tax credit (CTC)

The Child Tax Credit is worth a maximum of $2,000 per qualifying child. Up to $1,500 is refundable. To be eligible for the CTC, you must have earned more than $2,500.

What is a tax write off for a car? ›

Gas, insurance, and repairs — all of that adds up. Luckily, there are two IRS-approved methods for deducting car expenses: actual car operating expenses and the standard mileage rate. You can find both deductions on your Schedule C, used for reporting business expenses.

What can you claim as a tax deduction? ›

Deductions for meals, snacks, overtime meals, entertainment and functions. Deductions for medical assessments, vaccinations, COVID-19 tests, gym fees, cosmetics and personal grooming. Deductions for gifts or donations you make to deductible gift recipients, and the records you need.

How to get a $10,000 tax refund? ›

Individuals who are eligible for the Earned Income Tax Credit (EITC) and the California Earned Income Tax Credit (CalEITC) may be able to receive a refund of more than $10,000. “If you are low-to-moderate income and worked, you may be eligible for the Federal and State of California Earned Income Tax Credits (EITC).

What is the standard deduction for 2020 for seniors over 65? ›

The standard deduction for 2020 gets even better for age 65-plus taxpayers. Married taxpayers born before Jan. 2, 1956, whether filing jointly or separately, get an extra $1,300 apiece added to their standard deductions. The additional standard deduction is $1,650 for singles and heads of households.

What is the standard deduction for seniors? ›

The standard deduction for seniors this year is actually the 2022 amount, filed by April 2023. For the 2022 tax year, seniors filing single or married filing separately get a standard deduction of $14,700. For those who are married and filing jointly, the standard deduction for 65 and older is $25,900.

What is the standard deduction for seniors over 65 in 2023? ›

If you are at least 65 years old or blind, you can claim an additional 2023 standard deduction of $1,850 (also $1,850 if using the single or head of household filing status). If you're both 65 and blind, the additional deduction amount is doubled.

At what age is Social Security no longer taxed? ›

Social Security benefits may or may not be taxed after 62, depending in large part on other income earned. Those only receiving Social Security benefits do not have to pay federal income taxes.

What are the 5 standard deduction amounts? ›

The 2022 standard deduction is $12,950 for single filers, $25,900 for joint filers or $19,400 for heads of household. Those numbers rise to $13,850, $27,700 and $20,800, respectively, for tax year 2023.

How many standard deductions can I claim? ›

All tax filers can claim this deduction unless they choose to itemize their deductions. For the 2022 tax year, the standard deduction is $12,950 for single filers ($13,850 in 2023), $25,900 for joint filers ($27,700 in 2023) and $19,400 for heads of household ($20,800 in 2023).

Can you deduct health insurance premiums without itemizing? ›

“Self-employed health insurance premiums are deductible as an 'above the line' deduction on Form 1040, which means you can deduct the premium even if you don't itemize deductions on Schedule A,” says Hunsaker.

How can I get the largest tax return? ›

6 Ways to Get a Bigger Tax Refund
  1. Try itemizing your deductions.
  2. Double check your filing status.
  3. Make a retirement contribution.
  4. Claim tax credits.
  5. Contribute to your health savings account.
  6. Work with a tax professional.
Mar 22, 2023

What are at least 3 things that could be used for itemized deductions? ›

Itemized deductions include amounts you paid for state and local income or sales taxes, real estate taxes, personal property taxes, mortgage interest, and disaster losses. You may also include gifts to charity and part of the amount you paid for medical and dental expenses.

Can I deduct dental expenses from my taxes? ›

The IRS allows you to deduct unreimbursed expenses for preventative care, treatment, surgeries, and dental and vision care as qualifying medical expenses. You can also deduct unreimbursed expenses for visits to psychologists and psychiatrists.

Are eyeglasses tax deductible? ›

The bottom line. You can deduct the costs for prescription eyeglasses and eye exams on your tax return. But they must be a part of your itemized medical deductions, which need to exceed 7.5% of your adjusted gross income.

Can I deduct Medicare Part B premiums on my taxes? ›

If you qualify, you can deduct premiums for Medicare Part B and Part A if you're required to pay them, as well as Part D, Medicare Advantage and Medigap premiums, and eligible long-term care insurance premiums. You can claim this deduction as an adjustment to income on Schedule 1 when filing your Form 1040.

What all receipts should I keep for taxes? ›

Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks. These documents contain the information you need to record in your books. It is important to keep these documents because they support the entries in your books and on your tax return.

Can I use my bank statements for taxes? ›

They require any form of acceptable proof such as receipts, bank statements, credit card statements, cancelled checks, bills or invoices from suppliers and service providers. Without the appropriate documentation, the IRS won't allow your deductions. Remember, it's better to be safe than sorry.

What paperwork should I keep? ›

Knowing that, a good rule of thumb is to save any document that verifies information on your tax return—including Forms W-2 and 1099, bank and brokerage statements, tuition payments and charitable donation receipts—for three to seven years.

What is a hope tax credit? ›

The American Opportunity Tax credit (formerly Hope Credit) is a tax credit that may be available to you if you pay higher education costs. You may be able to claim Hope credit for qualified tuition and related expenses paid for each eligible student in your family.

What happens if I claim the American Opportunity Credit for more than 4 years? ›

You may only claim the American Opportunity Tax Credit (or the old Hope Credit) for four years of undergraduate education. So, if you have claimed the credit in four previous tax years for a given student, you cannot claim it again in 2012, a fifth time.

Do you have to pay back American Opportunity Credit? ›

The AOTC is figured by taking the first $2,000 paid towards the student's qualified educational expenses and adding 25 percent of the next $2,000 in educational expenses, up to $2,500. Up to $1,000 (or 40 percent of the total credit) is refundable even if a filer doesn't owe income tax.

Can I claim the American Opportunity Credit every year? ›

I'm just beginning college this year. Can I claim the AOTC for all four years I pay tuition? A10. Yes, if you remain an eligible student and no one can claim you as a dependent on their tax return, the AOTC is available for qualifying expenses paid during each tax year.

What is the American Opportunity Credit 2023? ›

American Opportunity Credit

To claim a $2,500 tax credit in 2023, single filers must have a MAGI of $80,000 or less, and joint filers must have a MAGI of $160,000 or less. A partial credit is available for single filers with a MAGI between $80,000 and $90,000, and joint filers with a MAGI between $160,000 and $180,000.

Who is eligible for lifetime learning credit? ›

To be eligible for LLC, the student must: Be enrolled or taking courses at an eligible educational institution. Be taking higher education course or courses to get a degree or other recognized education credential or to get or improve job skills. Be enrolled for at least one academic period* beginning in the tax year.

What is the new tax credit Biden? ›

In his latest budget proposal, President Biden proposes enhancing the Child Tax Credit (CTC) based on the temporary credit that was in effect for 2021 as part of the American Rescue Plan Act. The temporary enhancement was an enormous success, cutting child poverty nearly in half.

What is the $1,800 tax credit? ›

If you and your family meet the income eligibility requirements and you received each advance payment between July and December 2021, you can expect to receive up to $1,800 for each child age 5 and younger, or up to $1,500 for each child between the ages of 6 and 17, when you file your 2021 taxes.

What is the new $1000 tax credit? ›

$1,000 to each qualifying family with earnings under $25,000, reduced credit of less than $1,000 to each qualifying family with earnings between $25,000 to $30,000. Only available for children under age 6 and must qualify for the California Earned Income Tax Credit.

Can you write off car insurance? ›

Car insurance is tax deductible as part of a list of expenses for certain individuals. Generally, people who are self-employed can deduct car insurance, but there are a few other specific individuals for whom car insurance is tax deductible, such as for armed forces reservists or qualified performing artists.

Is it better to write off gas or mileage? ›

Here's the bottom line: If you drive a lot for work, it's a good idea to keep a mileage log. Otherwise, the actual expenses deduction will save you the most.

Can you claim car payments on taxes? ›

Car loan payments and lease payments are not fully tax-deductible. The general rule of thumb for deducting vehicle expenses is, you can write off the portion of your expenses used for business. So "no" you cannot deduct the entire monthly car payment from your taxes as a business expense.

How can I reduce my large tax refund? ›

If you always get a big refund – and you'd rather have that money in your pocket every month – increase the number of personal allowances on the W-4 worksheet to have a tad more money taken out for taxes. On the other hand, if you usually owe taxes every year, you may want to decrease the personal allowances.

Will I get a bigger tax refund if I make more money? ›

Specifying more income on your W-4 will mean smaller paychecks, since more tax will be withheld. This increases your chances of over-withholding, which can lead to a bigger tax refund. That's why it's called a “refund:” you are just getting money back that you overpaid to the IRS during the year.

Can I get a tax refund if my only income is Social Security? ›

You would not be required to file a tax return. But you might want to file a return, because even though you are not required to pay taxes on your Social Security, you may be able to get a refund of any money withheld from your paycheck for taxes.

What is the standard deduction for 2020 over 65? ›

The standard deduction for 2020 gets even better for age 65-plus taxpayers. Married taxpayers born before Jan. 2, 1956, whether filing jointly or separately, get an extra $1,300 apiece added to their standard deductions. The additional standard deduction is $1,650 for singles and heads of households.

How do I calculate my standard deduction? ›

All tax filers can claim this deduction unless they choose to itemize their deductions. For the 2022 tax year, the standard deduction is $12,950 for single filers ($13,850 in 2023), $25,900 for joint filers ($27,700 in 2023) and $19,400 for heads of household ($20,800 in 2023).

What is the standard deduction for 2020 2021 2022? ›

Standard Deduction Amounts for 2022 Taxes (Returns Due April 2023)
Filing StatusStandard Deduction 2022
Single; Married Filing Separately$12,950
Married Filing Jointly & Surviving Spouses$25,900
Head of Household$19,400
Apr 20, 2023

What is the standard deduction for a single senior over 65? ›

The IRS considers an individual to be 65 on the day before their 65th birthday. The standard deduction for those over age 65 in 2023 (filing tax year 2022) is $14,700 for singles, $27,300 for married filing jointly if only one partner is over 65 (or $28,700 if both are), and $21,150 for head of household.

Do seniors get an extra tax deduction? ›

Bigger Standard Deduction for Seniors 65 and Older

If you don't itemize your tax deductions, you can claim a larger standard deduction if you or your spouse are age 65 or older. The standard deduction for seniors is $1,750 higher than the deduction for people younger than 65 who file as individuals.

What tax deductions can I claim with standard deduction? ›

Here's a breakdown of each:
  • Educator Expenses. ...
  • Student Loan Interest. ...
  • HSA Contributions. ...
  • IRA Contributions. ...
  • Self-Employed Retirement Contributions. ...
  • Early Withdrawal Penalties. ...
  • Alimony Payments. ...
  • Certain Business Expenses.
Mar 7, 2023

How much money can a 70 year old make without paying taxes? ›

Basically, if you're 65 or older, you have to file a tax return in 2022 if your gross income is $14,700 or higher. If you're married filing jointly and both 65 or older, that amount is $28,700. If you're married filing jointly and only one of you is 65 or older, that amount is $27,300.

Do seniors pay taxes on Social Security income? ›

Some of you have to pay federal income taxes on your Social Security benefits. This usually happens only if you have other substantial income in addition to your benefits (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return).

What is the standard standard deduction? ›

Standard Deduction: How Much It Is in 2022-2023 and When to Take It. The 2022 standard deduction is $12,950 for single filers, $25,900 for joint filers or $19,400 for heads of household.

What are three itemized deductions? ›

Types of itemized deductions

Your state and local income or sales taxes. Property taxes. Medical and dental expenses that exceed 7.5% of your adjusted gross income. Charitable donations.

When should you itemize instead of claiming the standard deduction? ›

You may benefit by itemizing on Schedule A (Form 1040) PDF, if you: Can't use the standard deduction or the amount you can claim is limited. Had large unreimbursed medical and dental expenses. Paid mortgage interest or real property taxes on your home.

When should you itemize deductions? ›

If the total is larger than your standard deduction, there's a good chance you would benefit from itemizing. All of the rest of your itemized deductions, including state and local taxes, medical expenses, and charitable donations, are just icing on the cake.

What is the difference between a personal exemption and a standard deduction? ›

You can itemize your deductions or take a fixed amount with the standard deduction. A deduction is an expense that a taxpayer can subtract from their gross income to reduce the total that is subject to income tax. An exemption reduces the amount of income that is subject to income tax.


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