What are some ways to deduct taxes?

Question

What are ways to deduct taxes such as donating money to charity, paying for a child, buying a home and so forth? Is there a tax deduction limit? How much? Other tax savvy tips such as buying a train commuter card.

Answer 1

Don't work......go on welfare............

Answer 2

Buying a home is probably the one lifestyle change that will increase your deductions the most, since you'll be able to deduct all the interest you pay on your mortgage, and in the first year you'll probably be able to deduct any points you pay as well. Having a child also results in an increased deduction, but it will also increase your everyday expenses, so the net result might be that you break even.

Buying a train commuter card does not give you any kind of federal tax break.

For more information on what is or isn't deductible, see the following list of IRS topics:

http://www.irs.gov/taxtopics/tc500.html

Answer 3

Schedule A (if you are 1040 filer) or Schedule 1 (if you are 1040A filer) is where deductions are listed.  You can see a list of these items at IRS web site http://www.irs.gov/pub/irs-pdf/i1040sa.p...

In my book, the best way to reduce taxes is to save for retirement with any kind of retirement account (IRAs, 401k etc).  And if your income level is such, you may even qualify for Saver's Credit (i.e. the government pay you money to save for retirement).

For all other deductions you will need to spend money in order to save taxes, whether medical expenses, property taxes and mortgage interest for buying a home, donation to charity, job related expenses, dependent care, supporting a child etc.  

Retirement saving is the only method that you will save money for yourself and save taxes at the same time.

Best wishes.