What are the 350 tax deductions
Unless the $100K is gross income of a business, and you will have over $60K in business expenses to bring the business net down under $40K, you would not be. show more Unless the $100K is gross income of a business, and you will have over $60K in business expenses to bring the business net down under $40K, you would not be eligible for EIC.
Deductions can only take your income tax to zero. And using this year's figures, if your net income was 38,347, the highest income eligible for any EIC, if your two kids are under 17 and you can take the child tax credit for them, your taxes would already be zero just using the standard deduction: 38,347, minus 10,300 standard deduction is 28,047, minus 4 exemptions (13,200) is 14,847, which would mean a tax of $1483, which would be wiped out by the child tax credits for the kids, so you wouldn't owe anything, so having more deductions wouldn't do anything at all for you. Self employment tax is separate, and would not be helped by having more deductions - that gets added on after your income tax
is figured. So if you are really going to be in an income range where you can take EIC, having additional itemized deductions isn't going to help you any at all.
If you aren't expecting to get EIC, and the $100K is the net income from your business, then yes, deductions could help you. You'd probably be in a 25% bracket, so if your total itemized deductions are over 10,300, then each additional $4 of deductions over 10,300 would save you $1 in taxes. The first 10,300 wouldn't save you anything, since you'd get the standard deduction for that much anyway.
The actual numbers will change a bit next year for such things as standard deductions and exemptions, but not enough to change what I've said above.
If you pay cash for a house, you can take real estate taxes as a deduction. You'd get that if you had a mortgage also, but could also take mortgage interest which might make itemizing attractive.
To see what itemized deductions can be taken, go to irs.gov and download 1040 schedule A and its instructions.
Judy · 9 years agoSource: answers.yahoo.com