If this is your first time doing your own taxes, or if your life situation has changed between last year and this year, you might feel a bit confused. Sure, you could go to a professional in Singapore for a tax advisory service, but why not try to do it on your own this time?
If you want to get the most out of tax season (and you don’t want the IRS coming after you), you need to know: what’s a tax write-off and what isn’t?
Knowing what you can and cannot consider a tax write-off is a big deal. We’re here to help. Keep reading to learn all about it.
First: What’s a Tax Write-Off in General?
A tax “write-off” isn’t a technical term. Tax write-offs are really tax deductions.
Tax deductions are expenses that you can remove from your taxable income. This means that the IRS will give back the amount of money that you overpaid in your taxes based on the list of tax write-offs that you provide.
For example, if you made a business-related purchase that was $800, you’d get the tax from that $800 back. That said, you can’t write off everything.
Common Tax Write-Off Examples
Common tax write-offs vary depending on the industry that you’re in. Independent worker self employed people will have different expenses than people who work standard w2 jobs.
First, business expenses can often be written off. Business expenses can mean the cost of travel, the cost of a home office space or supplies, food expenses from business lunches, and more. Business tax write-offs are for people who own their own businesses or work for themselves.
If you have a traditional IRA, you’ll be able to write off some of your contributions (often up to $6,000). You can also write off contributions to an HSA.
Certain loans give you an opportunity for tax write-offs. Student loans and mortgages, for example, often allow for a small deduction.
If you donate money to charity, you can deduct some of that money. This is a great motivation to do something good for others!
What Can’t You Write Off?
Not everything that seems like it should be a tax write-off is a tax write-off.
If you pay child support or alimony, you cannot deduct this from your taxes even though these things are out of your control. You also can’t deduct political contributions (as these do not count as charitable contributions).
While you can deduct contributions to a standard IRA, you cannot deduct contributions to a Roth IRA.
If you’re unsure about other expenses that may or may not count as tax deductions, reach out to an accountant to be sure. The last thing you want is an IRS audit.
Are You Ready for Tax Season?
This might seem complicated, but as long as you pay close attention to your expenses and take your time while you’re doing your taxes, you won’t have a problem.
So what’s a tax write-off? It’s a tax deduction based on your expenses throughout the year. You may be able to get money back from the government if you play your cards right!
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