Tax Benefits for Renters
Renters make up nearly one third of American households, according to a 2003 study by the Joint Center for Housing Studies of Harvard University, with approximately 80 percent of adults under 25 renting apartments, condos or houses. While some people think there are no tax benefits available to renters, many credits and deductions may be claimed if you qualify.
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Renters' Tax Credit
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Many states, including Maryland and California, allow renters to claim a tax credit if they were renters for the majority of the tax year. While the tax credit varies by state, it can save you on average a few hundred dollars on your state income tax bill. If you have questions regarding the rules and qualifications for claiming this tax credit, consult a tax professional, as rules and regulations vary by state.
Standard Deduction
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Your standard deduction is the amount the IRS allows you to claim immediately based on your income and marital status. Everyone, including renters, can claim a standard deduction if they have no itemized deductions to claim. In 2010, the standard deduction for a single person was $5,700, $11,400 for a married couple and $8,400 for those who could file as "head of household."
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Home Office
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If you use part of your rented home as a dedicated home office, you may deduct a percentage of your rent. To figure out how much you may deduct, divide the square footage of your home office by the square footage of your rented home. The result is the percentage of your annual total rent paid that you may deduct if you itemize your deductions for the year.
Medical-Expense Benefits
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As a renter, if you must use medical equipment that uses electricity, you may be able to deduct the cost of the machines. Moreover, power companies will often give you a special kilowatts-per-hour rate. Any improvements to a rented space you pay for to enhance medical accessibility for a disability are also considered medical expenses; they are deductible if your total medical expenses are more than 7.5 percent of your income.
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