3 Tax Deductions You May Be Eligible for in 2023

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All of these could lower your tax bill. 

No matter how much you earn, your goal is to no doubt pay the IRS as little money as possible. And claiming the right tax deductions is a great way to do that.

A tax deduction exempts a portion of your income from taxes. So your associated savings is based on the tax bracket you fall into.

Let’s say you’re single and earn an income of $50,000. That puts you in the 22% tax bracket. If you claim a $1,000 deduction, that will result in $220 of savings. But if you’re in the 24% bracket, you’re looking at $240 of savings. With that in mind, here are three potentially lucrative tax deductions you may be eligible to claim this year.

1. IRA contributions

The money you put into a traditional IRA account is tax-free. So the more you contribute, up to the maximum allowed by the IRS, the more savings you can reap.

This year, the maximum IRA contribution is $6,500 for savers under the age of 50, and $7,500 for those 50 and over. You can claim an IRA contribution as a tax deduction even if you don’t file an itemized tax return.

Keep in mind that if you put money into a Roth IRA this year, your contributions won’t be tax-deductible for 2023. You will, however, get to enjoy other tax benefits, like tax-free growth and withdrawals.

2. A home office

If you’re self-employed or run a business, you can claim a home office deduction as long as you meet these requirements:

You have a space in your home that’s used solely for work purposesYour home office is your primary office (not one you only use a handful of hours a week)

Now, there’s been a lot of confusion surrounding the home office deduction in recent years since the number of people working from home has increased. But know that if you’re a salaried employee, you cannot take a deduction for your home office — even if it’s your main office and there’s dedicated space in your home for work purposes.

Rather, this deduction is only available to people who work for themselves or run their own business. And you need to itemize on your taxes to claim it.

3. Mortgage interest

If you’re paying off a mortgage loan, you’re allowed to deduct the interest portion of those payments. But don’t get confused and think you can deduct all of the money you pay every month. Rather, your loan servicer will give you an interest statement so you know how much to claim. This deduction, however, is only available to people who file an itemized tax return.

These three are only a few of the tax deductions you might be eligible for in 2023. If you want to eke out the most tax savings, sit down with an accountant and let them walk you through the deductions you’re eligible to claim. There may be tax deductions you’re eligible for that you never even heard of.

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