Tax Deductions and Credits to Consider for Tax Season 2024

The closest things to magic words when it comes to taxes are deductions and credits. Both help you keep more money in your pocket instead of Uncle Sam’s, but in slightly different ways.

Tax deductions help lower the amount of your income that can actually be taxed. Some deductions are only available if you itemize your deductions, while others are still available even if you decide to take the standard deduction.

Tax credits, on the other hand, are dollar amounts actually subtracted from your tax bill, and there are two types: refundable and nonrefundable. If a credit is greater than the amount you owe and it’s a refundable credit, the difference is paid to you as a refund. Score! If it’s a nonrefundable credit, your tax bill will be reduced to zero, but you won’t get a refund. Still a win!

Here are some potential deductions and credits you might be able to claim on your tax return this year. But while it’s never too early to start planning for taxes, the IRS doesn’t always follow our schedule. So, keep in mind that the details below could change as the 2024 tax season approaches.

1. Charitable Deductions

You can deduct charitable contributions you made during tax year 2023 as long as you itemize your deductions and donate to qualified organizations. The limit for charitable deductions is 60% of your adjusted gross income (AGI). By the way, AGI is your total income minus other deductions you’ve already taken.

2. Medical Deductions

If you found yourself with hefty medical bills in tax year 2023, you might be able to find at least some tax relief.

You can deduct any medical expenses above 7.5% of your adjusted gross income (AGI). For example, if your AGI was $100,000, you can deduct out-of-pocket medical expenses above $7,500 in tax season 2024. But you have to itemize your deductions in order to write off those expenses on your tax return.

3. Business Deductions

If you’re self-employed, there are a bunch of deductions you can claim on your tax return—including travel expenses and the home office deduction if you use part of your home for business purposes

But if you’re one of the millions of people who work remotely, you won’t be able to claim the home office deduction since it’s reserved for self-employed people only. Sorry!

4. Earned Income Tax Credit (EITC)

This one’s a biggie. The EITC is a refundable credit designed to help out low- and middle-income households. To qualify for the credit in tax season 2024, a single filer with no children must have an AGI below $17,640, while the cap for a married couple with three or more children is $63,398.

Maximum Adjusted Gross Income Limits

Dependents Claimed

Single, Head of Household or Widowed

Married Filing Jointly

0

$17,640

$24,210

1

$46,560

$53,120

2

$52,918

$59,478

3 or more

$56,838

$63,398

And here’s the maximum EITC credit amounts you can get based on your AGI and number of qualifying dependents:

Maximum EITC Credit Amounts

Qualifying Dependents

Maximum Credit Amounts

0

$600

1

$3,995

2

$6,604

3 or more

$7,430

You cannot claim the EITC in tax season 2024 if you have investment income over $11,000 or if you’re married filing separately.

Depending on your income, your filing status and number of dependents, the credit could save you anywhere from a few hundred to a few thousand dollars on your taxes.