Updated: Jul 11
Interested in maximizing your tax savings for the year? Explore a variety of new, expanded, and lesser-known tax deductions that have the potential to reduce the amount of taxes you owe significantly. Understanding the eligible tax deductions and various types of tax deductions available is vital to optimizing your tax planning for the 2022 tax year. Here's a quick look at five deductions, their key details, and how to know if you could leverage them to save when you file:
Maximizing Energy Efficiency Under the Inflation Reduction Act, home improvement projects that increase energy efficiency could help homeowners save on taxes. The Energy Efficient Home Improvement Credit offers a credit for upgrades like energy-efficient windows, water heaters, air conditioning systems, and more. Beginning in 2023, this credit will be 30% of the cost of eligible home improvements.
Incentives for Electric Vehicles Electric vehicle (EV) tax credits are also getting an update under the Inflation Reduction Act. An EV tax credit of up to $7,500 for new EVs has been extended until December 2032. Owners of used EVs can take advantage of a separate tax credit that offers up to $4,000 or 30% of the vehicle price.
Maximizing Investment Returns Using dividends to reduce taxes is not a new strategy, but it is sometimes overlooked. The IRS considers reinvested dividends as income, but you could be taxed at a lower rate depending on the circumstance.
Affordable Care Act Tax Credits
Health Insurance Premium Tax Credits The Inflation Reduction Act also extended the Affordable Care Act tax credit program through 2025. If you have health insurance through the HealthCare.gov marketplace or state exchange, you could be eligible for a premium tax credit.
Deducting Contributions If you are self-employed, you are solely responsible for paying taxes for Medicare and Social Security, but you can deduct 50% of the Federal Insurance Contributions Act (FICA) tax you pay.
Understanding the Eligible Tax Deductions and Types of Tax Deductions
Understanding the eligible tax deductions and types of tax deductions is crucial when planning your taxes for the 2022 tax year. By taking advantage of these deductions, you can potentially reduce your tax liability and maximize your tax savings. Remember to consult with a tax professional or refer to the IRS guidelines for accurate and personalized information regarding tax deductions.
Tax planning can be complicated, but by staying informed about eligible tax deductions and the different types of tax deductions available, you can make informed decisions and optimize your finances.
If you have questions about how to make the most of these deductions or need assistance with your tax planning, get in touch today. Our team is here to support your financial well-being and help you achieve your goals.