With time left before the April filing deadline, it makes good financial sense to recheck for don’t miss deductions and credits that can lower your tax bill. One caveat: You will have to choose between taking the standard deduction and itemizing individual deductions.
BIG BREAKS
One big break is the adoption tax credit, which is up to $14,080 in tax year 2019 for qualified expenses. It increases to $14,300 for tax year 2020. Another significant break for families with children who qualify by income is the earned income credit, which is up to $6,557 in tax year 2019 (rising to $6,660 for tax year 2020). Remember that you subtract credits from your tax liability while you subtract deductions from your taxable income.
SMALLER SUMS
Don’t forget that qualified education expenses can also help reduce your taxes. Joint filers can take up to a $2,000 lifetime Learning Credit (20% of up to $10,000 of costs) or up to a $2,500 American Opportunity Tax Credit if they qualify by income. You can’t claim both. For those taxpayers who itemize deductions, they may also deduct up to $2,500 of student loan interest, subject to income qualifications.