Maximize Tax Savings: 5 Must-Know Breaks

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Are you looking for ways to maximize your tax savings this year? With the 2024 filing season underway, understanding the various tax breaks available could potentially save you a significant amount of money. From eco-friendly home upgrades to electric vehicle purchases, here are five essential tax breaks to consider:

Get Rewarded for Going Green

If you invested in energy-efficient home improvements in 2023, you could be eligible for tax credits of up to $3,200 or more on your 2024 tax return. The Inflation Reduction Act expanded the energy-efficient home improvement tax credit through 2032, allowing taxpayers to claim credits annually without a lifetime limit. Qualifying upgrades include energy-efficient windows, doors, insulation, air conditioners, and more. Additionally, installing renewable energy sources such as solar panels may qualify you for the residential clean energy credit, offering further tax benefits.

Save on Taxes by Switching to an Electric Vehicle

Electric-powered vehicles have gained traction due to their environmental benefits, and purchasing one could lead to significant tax savings. Depending on the model and battery requirements, EV buyers may qualify for a tax credit ranging from $3,750 to $7,500. Ensure you understand the eligibility criteria and complete Form 8936 to claim the credit properly.

Leverage Your Student Loan Interest

For borrowers who resumed student loan repayments in late 2023, the student loan interest deduction provides an opportunity to lower taxable income by up to $2,500. Keep an eye out for Form 1098-E from your lender, indicating the amount of interest paid in 2023. This deduction applies not only to students but also to parents who repay their child's student loans.

Don't Write Off Itemizing

While the standard deduction is popular among taxpayers, itemizing deductions could lead to more significant savings, especially for homeowners or individuals with high medical expenses. Consider itemizing if you believe your deductible expenses exceed the standard deduction. Tax preparation software or a tax professional can help determine the most advantageous approach for your situation.

Prepare for Potential Child Tax Credit Changes

The possibility of an expansion to the child tax credit awaits Senate approval. If enacted, the refundable portion of the credit could increase from $1,600 to $1,800 for the current tax year, benefiting lower-income families. Stay informed about any updates to the child tax credit as they could impact your tax planning strategies.

As you navigate the 2024 tax season, staying informed about available tax breaks and potential changes to tax laws is essential. Whether you're upgrading your home, purchasing an electric vehicle, or repaying student loans, maximizing eligible deductions and credits can lead to significant savings on your tax bill.