If you are one of the many taxpayers out there who have been hit by the recent economic downturn, you may be curious about the possibility of applying for tax rebates and other tax relief programs that are being offered by the Internal Revenue Service (IRS). Tax rebates are an important way to take care of the increasing costs associated with running a household, as well as the rising cost of purchasing many necessary items that are required in the modern lifestyle. These items, while not especially costly in comparison to what they once were, are now extremely valuable, and without them many people cannot truly enjoy the good life that they once did. There are many different types of rebates available to taxpayers today, including educational expenses for children, repairs to homes and businesses, and so on.
Tax deduction is a reduction of taxable income and is most often a result of certain expenses, especially those incurred in order to generate more income. However, this type of reduction is only available if the taxpayer can show that the expenses actually applied to making more money were “taxable” in the first place. Tax deductions are also a form of tax credits and are designed to encourage individuals and families to save, invest, and work harder towards achieving their goals and objectives. While these savings and investment opportunities are always a good thing, it is important to understand that in order to take advantage of these tax credits, you must be able to prove that the expenses incurred went towards meeting the objectives you have set forth in your tax return. To do so, you must be able to provide a clear explanation as to why the expenses were necessary and how the resulting benefits are going to directly benefit you and/or your family.
Unfortunately, when you are trying to take advantage of deductions, many people fail to fully understand the tax code and how it works. As a result, many individuals and families end up inadvertently taking money off the table because they fail to fully understand and properly apply the rules and regulations regarding deductions. Unfortunately, even after being properly advised of the ins and outs of the tax code, many taxpayers still make the costly mistake of not utilizing their tax deductions in a wise way. For example, while it is true that the individual or family filing for deductions may be able to claim the cost of certain expenditures as a deduction, it is often times (but certainly not always) the case that an individual or family may actually be eligible to claim deductions for items that are indirectly related to meeting their objectives.
In the case of the aforementioned long-term care expenses discussed above, an individual or family could potentially be eligible to deduct medical costs related to getting one’s healthcare needs covered. However, what many people fail to realize, or chose to overlook, is the fact that the long term care discount rate (also known as LTCR) is also a tax deductible expense. The LTCR is the rate you pay for LTC care if you purchase it from a long term care facility, as opposed to purchasing it over the counter at your local pharmacy. If you have made the LTCR an important part of your overall annual budget, you may want to discuss it with your tax professional, especially if you fall within the eligibility requirements. While you may not be able to deduct a major medical expense, you may be able to deduct smaller, less expensive medical expenses.
When filing your tax return for the year 2019, it is always a good idea to prepare ahead by making a list of every single deduction you may be eligible for, as well as any others that you may have overlooked. This list should be easy to maintain and can be done once per year. However, if you are filing your tax return for the first time, it is especially important to do this work ahead of time to ensure that you correctly itemize your tax deductions.
There are several other common business expenses that can be included on your tax return. Examples include business expenses for gas and oil, home office expenses, and travel expenses to attend meetings. You can claim a tax credit for these expenses, but keep in mind that this credit is only available for the taxable part of your business expenses. If any non-taxable expenses are included, they must be itemized. The IRS will specify the allowable tax deduction amount for each itemized item.