taxes

[charlie32606]

Is there any way to minimize federal taxes? I do not have enough deductions and want to know if I am missing any obvious deduction.

[xmasbaby0]

If you do not have enough itemized deductions to exceed your standard deduction then you simply get your standard deduction.   Make sure you have thoroughly explored the Deductions & Credits section to see if you have overlooked any possible tax credits you are eligible for.   

STANDARD DEDUCTION

Many taxpayers are surprised because their itemized deductions are not having the same effect as they did on past tax returns.  The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact since the new tax laws went into effect beginning with 2018 returns.

Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. (Only the amount that is MORE than 7.5% of your AGI counts)   The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.

Your standard deduction lowers your taxable income. The standard deduction makes some of your income “tax free.”  It is not a refund.  You will see your standard or itemized deduction amount on line 12 of your 2023 Form 1040.

2023 STANDARD DEDUCTION AMOUNTS

SINGLE $13,850  (65 or older/legally blind + $1850)

MARRIED FILING SEPARATELY $13,850  (65 or older/legally blind + $1500)

MARRIED FILING JOINTLY $27,700  (65+/legally blind) )  + $1500 per spouse

HEAD OF HOUSEHOLD  $20,800 (65 or older/blind)  + $1850)

[TeriH]

Great question!

• The biggest impact to reduce income is to maximize contributions to a tax-deferred retirement account. If you are covered by a high-deductible health plan, you may be eligible to contribute to an HSA (Health Savings Account). The amount contributed to either, subject to annual limitations, will reduce taxable income.
•  A second method to decrease taxable income would be to increase itemized deductions.  For example, contributions to charity could be increased for the year of the profit unit pay (bunch several years of donations into a single year).

Here's a link to a TurboTax article on 4 Last-Minute Ways to Reduce Your Taxes.