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8 Most Common Tax Deductions

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Tax deductions–two words that taxpayers like to hear when filing their tax returns. While there are many tax deductions that can be claimed, there are a few tax deductions that are most commonly claimed. Here, we will talk about the 8 most common tax deductions that taxpayers claim. Commonly claimed tax deductions differ for taxpayers who claim dependents and for those taxpayers who do not claim dependents.

Common Tax Deductions For Taxpayers With Dependents

1. Earned Income Credit. If qualifications are met, working individuals who have low to moderate earned income may be eligible to claim this credit. This is a refundable credit, meaning that this credit can reduce a person’s tax liability below zero, in return, resulting in a refund. Even if a taxpayer doesn’t have a tax liability, they could still qualify for the credit. In some cases, qualifying for this credit can result in a substantial income tax refund.

In other words, qualifying for this credit is like receiving free money, which is why this credit is one of the most abused IRS credits on the books. This tax deduction is so lucrative that some people attempt to claim people as their dependents that don’t even qualify as dependents, in order to qualify for the credit. Though the IRS has implemented ways to curb the abuse of this credit, thus far, their efforts have seemingly fallen short of being victorious.

Refer to the IRS Pub 596 for more information regarding this credit.

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