How to reduce your tax bill *Updated 11/20/20
Updated: Nov 20
New in 2020 is a $300 charitable contribution deduction for those that don't itemize.
The two main ways to reduce your tax is through deductions and credits. Deductions lower your taxable income, while credits directly reduce the amount of tax. If you don't know about the available deductions and credits, you may be paying more than your share of taxes. Here are some of the deductions and credits available:
Student Loan Deduction: Up to $2500 of student loan interest
American Opportunity and Lifetime Learning Credit: You can't take both, but it could provide a credit up to $2500 on your Federal return based on your tuition and related expenses.
Child Tax Credit: $2000 per child up to 16 years of age or $500 for non-child dependents or children over 16
Charitable Donations: You would need to itemize on the Federal return for a deduction, but can receive a credit on the Idaho return for contributions to Educational Entities or Youth and Rehabilitation Organizations.
IRA Contribution deduction: You can lower your taxable income by contributing to a traditional IRA up to $6000 or $7000 if you are 50 or over.
Educator Expenses deduction: Educators can deduct up to $250 spent on classroom supplies
Additional information can be found at: https://www.fool.com/taxes/2020/11/15/your-2021-guide-to-tax-credits/