When looking for a professional to answer your tax questions, you want to search for certified public accountants (CPAs). These individuals specialize in accounting and have experience dealing with taxes on a regular basis.

Tap into the knowledge and expertise of these tax professionals by reviewing some of the most commonly asked questions they receive below.

Don’t worry about knowing tax rules. With TurboTax Live, you can connect with real tax experts or CPAs to help with your taxes — or even do them for you. Get unlimited tax advice right on your screen from live tax experts as you do your taxes, or have everything done for you—start to finish. So you can increase your tax knowledge and understanding and be 100% confident your return is done right, guaranteed

1. How can I reduce my tax bill?

The IRS provides several ways to control your tax bill through deductions and credits. Tax deductions allow you to reduce your taxable income, and tax credits allow you to reduce your tax liability directly.

When you make income from a job, you can often reduce your taxable income by contributing to an employer-sponsored retirement plan or your own individual retirement account (IRA). You may also have a high deductible health plan through your employer with access to a health savings account (HSA) or flexible spending account (FSA).

All of these accounts allow you to contribute pretax dollars to invest or hold in cash for certain expenses. As a result, these contributions lower your taxable income and save you money on your tax bill.

If you have dependents, you may qualify for the child tax credit, a partially refundable credit meant to lower the cost of raising a child. This credit, worth up to $2,000, lowers your tax bill dollar for dollar.

2. What kind of deductions do I qualify for?

Self-employed workers and business owners may have more opportunities to save on their tax bills, but employees still have plenty of savings opportunities available. As an employee, you can deduct contributions made to IRAs, HSAs and FSAs when preparing your Form 1040.

For contributions made to your 401(k) or other employer-sponsored retirement plans during the year, you will not need to deduct these again on your tax return. Instead, these dollars have already been taken out of your take-home pay and show up on your Form W-2.

Further, if you work as an employee, you can deduct student loan interest if you meet certain income criteria as well as home mortgage interest, state and local taxes and more.

If you have a side hustle, work as an independent contractor, or own a small business, you can deduct a lot of the costs related to running and maintaining your business. You have access to deductions for your home office, self-employment taxes, supplies, equipment, depreciation, health and business insurance costs, utilities and much more.

3. What is the difference between marginal and effective tax rates?

The United States uses a progressive tax system, meaning as you earn more income, your income falls into a higher marginal tax bracket. The U.S. has seven marginal tax brackets with the lowest beginning at 10% on income above $1 and the highest at 37% on income above $518,401 for single filers and $622,051 for married couples who file jointly.

Your tax bracket represents the total percentage of your taxable income that goes toward income taxes. Once you calculate your income, you use the marginal income tax brackets to calculate your total tax bill. From there, you divide the tax by your income to get your effective tax rate.

4. Which is better: a tax credit or a tax deduction?

All things equal, a tax credit is often preferable to a tax deduction. Tax credits reduce your tax liability dollar for dollar while tax deductions lower your taxable income. For example, if you prepare your taxes and have a total tax bill of $10,000, a $1,000 tax credit would reduce your bill by that amount.

If you had a $1,000 tax deduction and earned $50,000 in taxable income, your income tax liability wouldn't decrease by $1,000. Instead, your taxable income would now be $49,000. Depending on your tax bracket, that means you would save anywhere from $100 to $370 as compared to $1,000 from a tax credit.

Get every deduction you deserve. With TurboTax Deluxe, we'll search over 350 tax deductions and credits so you get your maximum refund, guaranteed. It’s free to start, and enjoy $10 off TurboTax Deluxe when you file. 

5. Can I deduct medical expenses?

Each year, the IRS allows you to deduct unreimbursed expenses for qualifying medical expenses if they exceed 7.5% of your adjusted gross income (AGI). These expenses can come from:

  • Preventative care
  • Medical treatments
  • Surgeries
  • Dental and vision care
  • Psychologist and psychiatrist visits
  • Prescription medications
  • Prescription appliances (glasses or contacts, false teeth, hearing aids, etc.)
  • Travel expenses paid to receive this medical care (mileage, bus fare, and parking fees)

How much you can deduct depends on your income and whether you itemize your deductions. If you earned an AGI of $100,000 in 2020 and itemized, you can deduct any unreimbursed medical expenses in excess of 7.5%, or $7,500. If you had $10,000 in unreimbursed qualifying expenses, you can deduct $2,500 ($10,000 - $7,500).

6. Should I itemize or claim the standard deduction?

Before the tax reform in 2018, you may have wondered whether you should itemize your deductions or simply claim the standard deduction. That decision got a lot easier after the 2017 Tax Cuts and Jobs Act passed because you don't itemize if the standard deduction saves you more on your tax bill.

The standard deduction nearly doubled from 2017 to 2018, making it harder to justify itemizing your deductions. In 2020, the standard deduction comes to $12,400 for single taxpayers and $24,800 for married taxpayers filing jointly. Even so, you should calculate your itemized deductions and compare them to the standard deduction each year to get the most out of the tax savings available to you.

7. How can I stay up to date with tax laws and changes?

The tax year 2020 was anything but quiet in terms of tax law changes. You might feel challenged to keep up with the flurry of updates, but you shouldn’t worry. TurboTax has the pulse on the latest changes to tax laws each year and will keep tax tips updated for the new tax year so you can feel confident in filing.

Looking for expert tax help? TurboTax Live offers real tax experts and CPAs to help with your taxes—or even do them for you. You can get a final review of your tax return before you file to ensure your taxes are done right, or you can even have a dedicated tax expert do your taxes for you, from start to finish, with TurboTax Live Full Service. You get unlimited tax advice year-round year, so you can be 100% confident your return is done right, guaranteed. TurboTax Live experts are highly knowledgeable, with an average 12 years of experience in professional tax preparation. Their tax advice, final reviews, and filed returns are guaranteed 100% accuracy. Learn more about How TurboTax Live Works.