At a time when many Americans continue to keep a close eye on their budgets, one place to look for some extra savings may be your tax return.Though returns are not due until April, as the year nears its end, it makes sense to analyze where credits and deductions could come from. Mortgages and higher education are two categories that can offer much-needed breaks for many families.
In many cases, the interest on a mortgage can be taken as a tax deduction. The interest can sometimes come from more than one property or mortgage, but in general the amount mortgaged cannot be more than $1 million. On the other hand, if the interest is particularly low, it also may not make sense to itemize the deduction. A free tax planning program offered by Turbo Tax may help some homeowners make decisions about what to deduct.
The interest on student loan debt can also be deducted based on a $2,500 break offered to individuals earning less than $55,000. Individuals earning up to $70,000 are qualified for a gradually reduced deduction. The deduction for student loans can be taken each year that you are making payments on the loan as long as you continue to earn less than $70,000.
In addition, if you make contributions to a traditional IRA, you can deduct that contribution if you meet income requirements. The money remains untaxed until it is withdrawn. This can be a particularly important incentive to add to put some money away at a time when saving seems difficult.
Click here for Turbo Tax’s Web site to learn more about their free tax preparation program.
--Bridget O'Sullivan
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