Tax Deductions

Should You Look for Extra Tax Deductions?

In the hassle of filing tax returns, many people settle for the standard deduction ($4,750 for single filers and $9,550 for married filers) since that's easier than gathering information and itemizing tax deductions. However, if you can legitimately claim more deductions than the standard amount, you may be earning money by taking the time to itemize. Here are some common deductions that you may find save your tax dollars.

Do You Own a Home?

If you have a home mortgage or a home equity line of credit, it frequently pays to itemize your deductions. Your lender should send you Form 1098, which is a mortgage interest statement. Any real estate taxes you paid are also deductible, so add that to the interest you paid. If this amount is more than the standard deduction, it's certainly better to itemize deductions.

Did You Pay State or Local Taxes?

Income taxes paid to state, county, or city governments are usually eligible for tax deductions as well. You can add up the amounts shown in box 17 and box 19 of your W-2 to see how much you paid.

Did You Make Charitable Donations?

If you donated any money to a religious organization or any other nonprofit or relief organization, you can claim that as a tax deduction. This includes the cash value of things you donated, such as clothes or old furniture. The IRS has guidelines on how to set a value for your charitable contributions.

Did You Have Extra Medical Expenses?

You can deduct any medical expenses that exceed 7.5% of your income. You cannot deduct expenses that were paid by your health insurance. Medical expenses that qualify as allowable deductions include doctor and dentist fees, lab costs, glasses and contacts, prescriptions, medical supplies, and health insurance premiums.

Are There Other Deductions You Can Take?

There are many smaller deductions that are often overlooked. For instance, you can deduct unreimbursed work expenses, such as dues, books or magazines, protective work clothing, or tools and supplies. There are other areas that offer tax deductions, such as certain fees paid to law or tax professionals, or to maintain your IRA.

If you have questions about other miscellaneous deductions, read IRS Publication 529, "Miscellaneous Tax Deductions".

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