Tax credits and deductions topics

Can I deduct medical mileage and travel?

TurboTax Help — Tue, 21 Dec 2021 23:07:09 GMT

Yes, you can deduct costs associated with using your car or public transportation for medical visits and even to pick up prescriptions. For car expenses, you can use either the standard mileage rate (TurboTax figures it for you) or actual expenses, such as gas. You can add actual out-of-pocket expenses, such as parking fees and tolls, whether you use the standard mileage rate or actual expenses method. Be sure to keep records of each trip, including the date, the mileage driven, who you saw, and the purpose. Keep receipts for each expense. For more information, see Where do I enter my medical expenses? Related Information: Where do I enter my medical expenses? Can I deduct mileage? What kinds of medical expenses are deductible? Can I deduct health insurance premiums taken from my paycheck? Can I deduct Medicare premiums?

Do teacher union dues qualify for the Educator Expense deduction?

TurboTax Help — Mon, 20 Dec 2021 22:39:58 GMT

No; only unreimbursed expenses for books, supplies, and equipment that you purchased for classroom use qualify for the $250 Educator Expense deduction. More info Employee union dues are no longer deductible in tax years 2018 through 2025 as a result of the Tax Cuts and Jobs Act. Prior to the Act, they were partially deductible as a miscellaneous deduction under the 2% rule.

Where do I enter my sales taxes paid?

TurboTax Help — Wed, 12 Jan 2022 03:28:07 GMT

If you’re taking the sales tax deduction, here’s how to enter the sales tax you paid: Open or continue your return Search for sales tax and select the Jump to link in the search results When asked how you want to enter your sales tax info: Choose EasyGuide if you want us to walk you through it Choose Enter All My Receipts if you’ve saved all of your receipts and can give the grand total Related Information: Which deduction should I choose, state and local income tax or sales tax? What sales tax payments can I claim on my federal taxes?

Can I claim my parent as a dependent in 2021?

TurboTax Help — Wed, 22 Dec 2021 21:05:39 GMT

Whether it's a parent, friend, or relative you support, being able to claim someone as a dependent can save you money. If you're not sure you can claim your parent or another person as a dependent, we'll help you figure that out. Generally, you can claim your parent if they didn't have more than $4,300 in gross income (excluding nontaxable Social Security) and you provided more than half of their support in 2021. Your parent doesn't have to live with you. There are a few other specifics we'll ask you about as we go along. Related Information: What does "financially support another person" mean? Does a dependent for 2020 have to live with me? Can I claim myself or my spouse as a dependent? Who can I claim as my dependent? What is a "qualifying person" for Head of Household?

Can I deduct mortgage points?

TurboTax Help — Thu, 30 Dec 2021 18:18:16 GMT

Yes, you can deduct points for your main home, if all of the following conditions apply: They're discount points (see the definition) The mortgage is used to buy, build, or improve the home, and the home is the collateral for the loan Paying mortgage points is a customary practice in your area and the points you paid aren't excessive for your neighborhood The points were paid directly to the lender, either by you or the seller (no borrowing) Your down payment, plus any points the seller paid, exceed the points paid amount You use the cash method of accounting (almost all taxpayers do) The points are calculated as a percentage of the mortgage principal (not required on home-improvement loans) The points are clearly itemized on your settlement statement as points (not required on home-improvement loans) If you meet all the above criteria, you can either deduct all your points in the year you paid them or deduct them in equal increments over the life of the loan. Either way, you'll need to itemize to get the deduction. The deduction for mortgage interest is capped at $750,000 of debt. Interest on up to $1 million of acquisition debt for loans prior to December 15, 2017 is grandfathered. Are points deductible on a second home and refinances? On a second home, points can only be d...

How much can I deduct for donating a car?

TurboTax Help — Tue, 21 Dec 2021 18:56:10 GMT

The maximum you can deduct is the fair market value (FMV) of your car. Generally, that's the price a willing buyer would pay a willing seller, assuming neither party is being forced to buy/sell and both parties have reasonable knowledge about the condition of the vehicle. Here's where it gets a little tricky: if the FMV is $500 or less, claim the FMV. If the FMV of your donated car exceeds $500, you can only deduct the amount the charity received (or expects to receive) when sold at auction, in most cases. For example, if your old Subaru hatchback had a FMV of $950 at the time of donation and the charity later sold it for $680, you can only deduct $680. Charities must give you Form 1098-C with the allowed donation amount within 30 days of the donation or sale. You'll need to send a copy of Form 1098-C along with some other paperwork to the IRS (we'll walk you through this process in TurboTax). How do I determine the FMV of my car? The most accurate method is to look for private party ads for similar vehicles for sale in your area. If you can't find sales ads for similar vehicles, you can use industry pricing guides like Edmunds or Kelley Blue Book. Related Information: How do I enter my 2020 charitable donations in TurboTax? Do I need a receipt for my donation? How do I determ...

How do I determine the value of donated items?

TurboTax Help — Thu, 16 Dec 2021 02:11:33 GMT

Most of the time it will be the fair market value (FMV) of your item. However, if the amount you originally paid for the item is less than the FMV, you must use the original cost of the item. You can get the FMV by looking at similar items for sale on eBay, Craigslist, or at your local thrift store. When you use ItsDeductible, it will assign a FMV to most items that are commonly donated. Determining the value of a donated car involves a few more steps, if its value is over $500. Related Information: What is ItsDeductible? How and where does Its Deductible obtain its values? Do I need a receipt for my donation? How much can I deduct for donating a car?

Do I need a receipt for my donation?

TurboTax Help — Fri, 17 Dec 2021 23:21:37 GMT

Yes. For noncash donations under $250 in value, you'll need a receipt unless the items were dropped off at an unmanned location such as a clothing bin. Noncash donations from $250 to $500 in value require a receipt that includes the charity's name, address, date, donation location and description of items donated. Noncash donations over $500 in value also require a record of how and when the items were acquired and their adjusted basis. If the donation exceeds $5,000 in value, it'll need a written appraisal from a qualified appraiser. For cash donations under $250, you'll either need a bank record (like a canceled check or bank statement) or a written acknowledgment from the charity, which includes the date and amount of your contribution. Bank records are insufficient for cash donations of $250 or more. Instead, you'll need something in writing from the charity which includes the date and amount of your donation. Donations made through payroll deduction require you to keep a pay stub, Form W-2 or other document furnished by your employer that shows the date and amount of your contribution. In addition, you'll also want to keep the pledge card showing the name of the organization. Related Information: Can I deduct donations to charity? How do I enter my 2020 charitable donati...

What is the Tuition and Fees Deduction?

TurboTax Help — Tue, 28 Dec 2021 16:01:30 GMT

The Tuition and Fees Deduction is no longer available beginning in tax year 2021. However, you might still be able to claim this deduction if you're amending or filing a tax return from 2018, 2019, or 2020. The Tuition and Fees Deduction for prior year returns The Tuition and Fees Deduction allows eligible taxpayers to deduct up to $4,000 in education expenses for themselves, their spouses, or their dependents. You don't need to itemize to get the deduction. You're eligible for this deduction if you don't qualify for the American Opportunity Credit or the Lifetime Learning Credit, unless: You’re filing as single or head of household and your AGI exceeds $80,000 You’re filing jointly and your combined AGI exceeds $160,000 You’re filing separately from your spouse Someone else, such as a parent, is eligible to claim you as a dependent on their tax return (whether or not they actually do it) You also need to have qualified expenses, which include tuition, course-related books, supplies or equipment, enrollment fees, lab fees, and other expenses required to enroll or attend an eligible educational institution. Things you can't claim: Room and board Extracurricular activities Student health fees Insurance Living expenses like food Housing, or transportation Fees for noncredit or "f...

What are the qualifications for the Earned Income Credit (EIC or EITC)?

TurboTax Help — Fri, 04 Feb 2022 23:35:01 GMT

https://youtu.be/B-FRu8VjNzk To qualify for and claim the Earned Income Credit you must: Have earned income; and Have been a U.S. citizen or resident alien for the entire tax year; and Have a valid Social Security number (not an ITIN) for yourself, your spouse (if filing jointly), and any qualifying children on your return; and Not have investment income exceeding $10,000; and Not be filing a Form 2555 or 2555-EZ; and File a return with the Single, Married Filing Jointly, Head of Household, or Qualifying Widower filing status, even if you're not required to file a return. In addition, both your earned income and Adjusted Gross Income (AGI) may not exceed: $21,430 if you're not claiming a qualifying child ($27,380 if filing jointly); $42,158 if you're claiming 1 qualifying child ($48,108 if filing jointly); $47,915 if you're claiming 2 qualifying children ($53,865 if filing jointly); $51,464 if you're claiming 3+ qualifying children ($57,414 if filing jointly). One more thing—if you're not claiming a qualifying child: You (and your jointly filing spouse) can't be claimed as a qualifying child or dependent on anyone else's return, and You must be at least 18 if you are a qualified former foster youth or a qualified homeless youth, regardless of whether or not you are a specified...

What if somebody already claimed my dependent?

TurboTax Help — Wed, 12 Jan 2022 01:06:59 GMT

First, revisit the My Info or Personal Info section to verify your dependent's Social Security number (if wrong, correct it and go through the File section to resubmit your return). If you already verified this info, you'll need to paper-file your return as the IRS will continue to reject your attempts to e-file. Then, if you know who claimed your dependent, ask them to amend their return by removing the dependent. Amendment processing can take weeks or even months, which is why it's best to paper-file your return in the meantime. If the other taxpayer is uncooperative, the IRS will eventually contact both of you to figure out who gets to claim the dependent. The losing party will then be liable for any additional taxes, penalties, and/or interest as a result of the false claim. Important: If you don't know who might have claimed your dependent, it could be a case of tax-related identity theft. Please contact us for assistance. What to do if you suspect identity theft. Related Information: Who can I claim as my dependent? What to do if you suspect tax-related identity theft How do I add or remove a dependent? How do I fix e-file reject IND-507? What is a personal exemption? Related Information: Who can I claim as my dependent? How do I add or remove a dependent? How to amend (...

Can I deduct parking fees for attending school or college?

TurboTax Help — Mon, 20 Dec 2021 22:53:01 GMT

Parking fees, transportation costs, and mileage don't count as deductible education-related expenses. If you're self-employed, you might be able to deduct these fees if the education maintains or improves skills required by your current line of work or is mandated by law or industry regulations (for example, if you’re required to take X hours of continuing education every year to keep your license). Related Information: What are qualified education expenses for the American Opportunity and Lifetime Learning credits?

What is depreciation?

TurboTax Help — Thu, 23 Dec 2021 01:09:46 GMT

On your business taxes, depreciation (also called capitalization, cost recovery, or amortization) lets you deduct the "used up" portion of an asset's cost every year, until the asset no longer retains any value or has been sold, destroyed, or otherwise disposed of. The concept of depreciation is based on the notion that business assets eventually wear out, get used up, or become obsolete. With one notable exception (Section 179), depreciation is required for most "big ticket" business assets that have a useful life of more than one year and wear out over time, such as buildings, vehicles, equipment, office furniture, computers, and tools used by the business. Business assets must meet 3 conditions to be depreciable: The asset must be used to produce business income, rent, or royalty payments. There are exceptions for assets that failed to produce income, although that was their primary purpose. The asset must wear out, decay, become obsolete, or lose value over time. The asset has a useful life that can be measured and exceeds 1 year. You're not allowed to depreciate consumable items like office supplies, even if they last more than a year. You're also not allowed to depreciate land, inventory, or leased property. Once a depreciable asset is sold, bartered, discarded, or destr...

Nonresident state tax credit doesn't display in resident state return

TurboTax Help — Tue, 18 Jan 2022 21:59:36 GMT

If you need to prepare more than one state return, you may notice that your resident state return isn't giving you a credit for the taxes you paid to the nonresident state(s). The state where you live (your resident state) will tax all your income and will give a credit for taxes paid to the nonresident state on the resident state return so you aren't double taxed. In order to receive a non-resident state tax credit follow these steps: Enter your nonresident state information first Enter your resident state information next Check to make sure you choose the resident state long form On your resident return summary screen, you'll see a credit for your nonresident state taxes If you created your resident state return before you began work on your nonresident state return, TurboTax will not pull over any tax amounts (credits) from your nonresident state return. To resolve this issue, you will need to remove your resident state return and then create a new resident state return. Doing this has the same effect as entering your nonresident state first, which is the order the returns should be entered in. How are the resident and nonresident incomes allocated? Depending on your state, resident and nonresident incomes may be allocated automatically according to your Wages & Income entr...

What is the Educator Expense deduction?

TurboTax Help — Wed, 22 Dec 2021 02:57:37 GMT

If you are a teacher, instructor, counselor, aide, or principal that works at least 900 hours in a school that provides K–12 education, you can deduct up to $250 in unreimbursed expenses for books, supplies, and equipment used in the classroom. Although the $250 deduction survived the Tax Cuts and Jobs Act signed into law on December 22, 2017, expenses above and beyond the $250 limit are no longer deductible in tax years 2018 through 2025. Prior to the tax law change, the excess qualified as a miscellaneous itemized deduction subject to the 2% limitation. Related Information: Do teacher union dues qualify for the Educator Expense deduction? Can I deduct work-related education expenses? Can I deduct union dues? Can I deduct mileage? How do I change from the standard deduction to itemized (or vice-versa)?

Can I deduct my moving expenses?

TurboTax Help — Tue, 25 Jan 2022 00:30:40 GMT

If you’re active-duty military and were ordered to move as the result of a PCS (permanent change of station), you can deduct your out-of-pocket moving expenses to your new post, including travel and lodging (but not meals). You can't deduct moving expenses for which you were reimbursed, nor can you deduct moving expenses that were paid for by the government. For everybody else, the moving expense deduction has been suspended for tax years 2018 through 2025 because of the Tax Cuts and Jobs Act that was signed into law in late December of 2017. Before the suspension, full-time employees who worked at least 39 weeks during the first 12 months at their new job location could deduct moving expenses that were paid within one year of the date they first reported to work at their new workplace, provided the distance between their old home and new workplace was at least 50 miles further than it was from the old workplace. Related Information: What is the 2% rule? Which federal tax deductions have been suspended by tax reform? What types of meal and entertainment expenses are 100% deductible on a business return? I bought a house, what can I deduct?

How do I claim the Adoption Credit in 2021?

TurboTax Help — Fri, 31 Dec 2021 23:06:32 GMT

The adoption tax benefits provide an incentive for individuals or families to adopt an eligible child. The 2021 maximum dollar amount per eligible child is $14,400. If your expenses were spread over multiple years, you might be able to spread the credit over multiple tax returns (see Who Qualifies and What Adoption Expenses Qualify below). Included in the tax benefits is a nonrefundable tax credit. This is a dollar-for-dollar reduction in the amount of federal taxes owed (tax liability) for the year. You won't get a refund if the tax credit is more than your total tax owed for the year. However: Any credit in excess of your tax liability may be carried forward for up to five years There's an exclusion from income for an approved employer-provided adoption assistance program To claim the adoption tax credit in TurboTax: Open or continue your return if it isn't already open Search for adoption credit and select the Jump to link On the Did you pay any adoption expenses in 2021 or earlier? or the Credit for Adoption Expenses screen, read the information and, if you qualify, answer Yes Continue answering questions until you're finished An eligible child is: Any child under the age of 18. If the child turned 18 during the year, the child is an eligible child for the part of the year...

Can I deduct contributions to a 529 plan?

TurboTax Help — Thu, 16 Dec 2021 23:40:26 GMT

No, not on your federal taxes. However, some states let you deduct all or part of your 529 plan contributions. If your state is one of those states, we'll prompt you to enter your 529 contributions when you get to the credits and deductions portion of your state taxes. Related Information: What are 529 plans? Where do I enter a 1099-Q? Related Information: What are 529 plans?

Can the cost of private schooling be deducted?

TurboTax Help — Thu, 23 Dec 2021 01:02:12 GMT

No, the cost of private school (K-12) doesn't qualify for any education deductions or credits on your federal return. If your child attends a daycare program before or after school, whether at a public or private school, you may qualify for a child care credit. Some private school tuition for special needs students may be eligible for a medical deduction. The Tax Cuts and Jobs Act allows distributions from a 529 plan to be used for elementary or secondary (K-12) public, private, or religious school expenses. A few states allow deductions for K-12 education and/or home schooling expenses. If your state is one of them, we'll ask you about it when we get to your state return. Related Information: How do I contact TurboTax? How do I change my transferred direct deposit information? Is an inherited IRA or retirement plan taxable? What are the qualifications for the Earned Income Credit (EIC or EITC)? What is the cost basis of inherited stock?

What can I deduct when refinancing rental property?

TurboTax Help — Tue, 04 Jan 2022 15:13:15 GMT

Unlike your primary residence, where you can only deduct qualified points and interest, you can deduct all costs associated with obtaining a new mortgage for your rental property. Typical loan-related expenses include: Points Loan origination and loan assumption fees Mortgage insurance premiums Application fees Credit report fees Appraisal fees (if required by the lender) The costs associated with obtaining a mortgage on rental property are amortized (spread out) over the life of the loan. For example, if it cost you $3,000 to refinance your 30-year mortgage, you'd be able to deduct $100 per year for the next 30 years. Other refinance-related expenses not directly related to the mortgage may also be deductible. Generally, if the cost is associated with operating the property (like real estate taxes or hazard insurance) they're deducted as expenses, whereas costs associated with purchasing the property (like title search fees or recording fees) are added to the property's cost basis, which means they get depreciated. When you enter your rental property information, we'll ask about all of these things and deduct them according to the rules. Related Information: Where do I enter income and expenses from a rental property? What kinds of rental property expenses can I deduct? Can I...