Taxpayers Run Risk of Leaving Thousands Unclaimed Due to Lack of Awareness of Tax Credits and Deductions
As the Internal Revenue Service (IRS) begins accepting tax returns for the 2024 tax year on Monday, taxpayers are warned of the potential for leaving thousands of dollars unclaimed due to a lack of awareness of certain tax credits and deductions. According to Karla Dennis, CEO and founder of KDA, Inc., a tax strategy agency, many taxpayers are unaware of various tax credits and deductions that they may be eligible to claim and reduce their tax liability.
Tax credits and deductions are available for activities such as education, medical expenses, state and local taxes, and more. For example, the lifetime learning credit and the American opportunity credit can help reduce tax liability for individuals who have spent money on higher education. Additionally, taxpayers who have spent more than 7.5% of their adjusted gross income on healthcare activities may be eligible for the medical expense deduction.
Dennis also highlighted the importance of itemizing returns to claim the state and local tax (SALT) deduction, which is available up to a cap of $10,000. She recommends that taxpayers keep track of their income taxes, property taxes, and DMV fees to maximize the deduction.
To avoid missing out on valuable tax credits and deductions, Dennis advises taxpayers to familiarize themselves with the options available and consider consulting a tax advisor earlier in the year. She also suggests doing a “12 by 12” exercise, where taxpayers review their expenses for each month of the year one at a time, to help avoid feeling overwhelmed and forgetting important deductions.
By being aware of these tax credits and deductions, taxpayers can minimize their tax liability and potentially save thousands of dollars. With the IRS beginning to accept tax returns on Monday, it is essential for taxpayers to take advantage of these benefits before filing their return.
