Understanding tax deductions is essential for optimizing your tax savings and reducing your overall tax liability. By identifying eligible deductions and implementing proper record-keeping, you can potentially lower your taxable income and keep more money in your pocket. Here are key points to understand:Itemized deductions vs. standard deduction: When filing taxes, you can either claim the standard deduction provided by the IRS or choose to itemize deductions if your eligible expenses exceed the standard deduction amount. Evaluate your situation to determine which option is more advantageous.

Common itemized deductions: Some common itemized deductions include mortgage interest, state and local taxes (SALT), medical expenses, charitable contributions, and certain education-related expenses. Ensure you have proper documentation and receipts to support these deductions.

Above-the-line deductions: Above-the-line deductions, also known as adjustments to income, are deductions you can claim without itemizing. They directly reduce your taxable income and include contributions to retirement accounts, student loan interest, and self-employed health insurance premiums, among others.

Deductible business expenses: If you're self-employed or a business owner, familiarize yourself with deductible business expenses. These can include office supplies, business-related travel, professional fees, and marketing expenses. Keeping detailed records is crucial for substantiating these deductions.

Consult a tax professional: Tax laws and deductions can be complex, so consider working with a tax professional who can guide you through the process, ensure you're maximizing your deductions, and help you comply with tax regulations.

This article was generated by Open AI with human guidance and editing along the way.