Tax deductions can ease your liability by reducing the amount of taxable income you have. Though tax deductions can substantially reduce what you owe, you must ensure you’re eligible for those you claim on your tax return. If you have not yet filed your taxes, consider using the following deductions to lower what you owe:
You can deduct any capital losses to help offset your tax liability. The losses that you incurred must be greater than what you gained. If you are married filing separately, you can claim up to $1,500 annually for 2014. For those filing jointly, the limit is $3,000 for a year.
The annual gift tax exclusion amount for 2014 and 2015 is $14,000. The IRS says, “if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, $13,000 in 2009-2012 and $14,000 on or after January 1, 2013, the annual exclusion applies to each gift.”
If your gift is less than $14,000, then you do not need to report it to the IRS. You will not be paying gift tax even if you gave gifts of more than 12,000 per person in a year, as long the total amount is less than $1 million.
Home-Based Office Expenses
You can claim certain expenses if you are using your living area for work purposes. You can only deduct those expenses if that space is used exclusively for your office. Self-employed persons who have this type of arrangement can also deduct these expenses.
Expenses for Pets
Even though expenses made for your pet are not typically tax-deductible, there are certain exceptions if the animal protects your health and well-being. You can also deduct expenses if you use the pet for guarding your business property. These can then be calculated as business expenses.