Taxpayers have the option of claiming the standard deduction or itemizing their deductions. Itemizing can mean a bigger tax refund, but it is also a very detailed process that can be a pain in the neck to complete. With the filing deadline just a month away, you are probably wondering which method is best for you.
Fortunately, there is one option that uses the best of both worlds. There are a few deductions that taxpayers can claim, even if they choose not to itemize their taxes. This means that you can benefit from these deductions without going through the hassle of calculating your expenses.
Contributing to an individual retirement account, or IRA, allows you to deduct the contribution from your taxable income. IRAs do have a limit on how much you can contribute. The maximum for Americans under age 50 is $5,500, while those who are older than 50 can contribute $6,500. That is several thousand dollars of income that will not be taxed.
Alimony payments can also be deducted. You will definitely want to take advantage of this deduction, since it will only be around for one more year. The Trump administration’s tax overhaul eliminated the alimony deduction starting Dec. 31, 2018. If you owe alimony to your former spouse, deduct it from your taxes while you still can.
One deduction that takes people by surprise is moving costs. If you have moved in the past year due to work purposes, you are eligible to deduct the expenses from your 2017 returns. The deductible expenses include movers, storage, moving trucks and other costs that you may have incurred during the process. There is one catch: Your new job has to be 50 miles farther away from your old home than your last job was.
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