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Credit card and loan interest: Self-employment tax deductions might be hiding on those credit card statements, so keep them handy

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The best tax deductions in 2022

Reduce taxable income, reduce and lower taxes. That is the name of the game in tax deduction. Now that we better understand tax deductions — and the two types that tax filers must choose from — let’s look at the most common tax deductions available to you when preparing your 2021 tax returns.

Student loan interest deduction

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Student Loan Interest is a popular deduction among all college graduates (and their parents), especially among those with massive student loan debt. Paying back student loans can be quite a long and grueling process, but the student loan interest deduction does offer a little relief.

This deduction allows filers to deduct up to $2,500 from taxable income if they paid interest on a qualifying student loan, either for themselves or a dependent.

There are qualifications, of course, student loan deduction depends largely on modified adjusted gross income (MAGI) and the respective tax bracket. For example, if a filer’s MAGI is less than $85,000, or $170,000 if filed jointly, then student loan interest paid on both federal and private student loans can be deducted. Here are a couple of examples of the criteria:

  • Education of others: If the loan was taken out in your name for someone else (for a child or dependent) a deduction is permitted.
  • Education expenses: If the loan was used for qualified education expenses like tuition, books, housing, and transportation.
  • Forced repayment: Even if you are legally obligated to repay the loan or if wages are being garnished to repay the interest can still be deducted. (más…)