With the 2017 tax preparation season underway, now is the time to consider ways that you can lower your tax liability. When you want to ease what you potentially may owe or even anticipate an IRS refund, you can use these five 2017 tax breaks when filing your returns this year.

Retirement Account Contributions

The federal government encourages people to save for retirement. To convince you to put money toward your retirement, the IRS allows you to deduct a limited amount of your contributions from your income, thus lowering the amount of money for which you are taxed.

If you are under the age of 50, you can contribute up to $18,000 to an employer-sponsored 401K retirement account or up to $5500 to an Individual Retirement Account, or IRA. If you are age 50 and above, you can contribute up to $24,000 to your 401K or up to $6500 to an IRA.

The amount of money that you contribute goes in on a pre-tax basis and is deducted from the amount of income that you must claim on your returns. The amount after this retirement deduction is the total income for which you will be taxed by the IRS.

Homeowner Deductions

The federal government also encourages people to buy homes, so much so that it permits homeowners to take certain deductions on their taxes. If you are a single taxpayer homeowner, you can deduct up to $500,000 of your mortgage interest on your taxes. If you are a married homeowner, you can deduct mortgage interest valued up to $1 million.

Further, depending on you where you live, you may be able to claim your property taxes on your return. Likewise, if you work from home or telecommute for your employer, you may be able to claim work-at-home expenses like:

• Utilities (gas, water, and electricity)
• Internet and phone
• Homeowners insurance
• Other expenses related to working out of your home

These expenses are typically claimed as part of a home office deduction. If you are not sure you can claim certain work-at-home deductions on your taxes, you should ask a tax professional for guidance.

Federal Tax Credits

The IRS allows families to recoup expenses related to raising children and sending children to college. One of the most popular tax credits for parents and working families is the Earned Income Tax Credit. This credit allows parents and caretakers to get a refund of up to $6318 depending on how much money they make and how many dependent children they have in their household.

Likewise, parents and caretakers can claim the Child Tax Credit, which gives a refund of up to $1000 for every qualifying child under the age of 17.

Other credits include the American Opportunity Tax Credit, which gives parents and caretakers up to $2500 for each qualifying college-age child in the taxpayer's household. Finally, the Child and Dependent Care tax credit lets parents and caretakers claim up to $3000 in child care expenses for one child and up to $6000 for two or more children.

Commuter Expenses

The IRS wants to help American workers recoup some expenses related to traveling to and from work. The Commuter Tax Credit lets people claim costs for parking and commuting to and from work from their tax returns.

During the 2017 tax prep year, people can claim up to $255 per month for transit expenses and up to $255 for parking. The total credit that can be claimed for this deduction is $510 per month or $6120 per year.

 

Charitable Contributions

If you donate to IRS-recognized charities, you can deduct a percentage of your contributions from your returns. Along with money, the IRS allows you to deduct the fair market value of charitable contributions like:

• Clothing
• Food
• Books
• DVDs
• CDs
• Used vehicles

You can also deduct the fair market value of anything that you donate to a charitable auction.

The IRS allows you to utilize unique ways to lower your tax burden. You can reduce what you owe to the IRS in 2017 by making use of these five tax deductions this year.