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Tax Deductions
Tax deductions can be extremely confusing for most tax payers. They wonder what they are able to deduct on their taxes. The matter is so confusing for many taxpayers that they make the decision to take the standard deduction rather than itemizing their tax deductions. In some cases the standard deduction may be more than the amount that the taxpayer would be able to deduct by itemizing their tax deductions, but not always.
There are often several fairly big tax deductions that many taxpayers miss altogether which could save them money on their taxes.
One of the biggest is related to charity. Remember that even if you did not make a cash contribution to charity, you can still take non-cash tax deductions if you donated clothing, furniture, etc. Remember that you should have a receipt to prove the contribution in the event that you are audited.
You may also be able to deduct your medical expenses under certain circumstances. Your medical expenses must total more than 7.5% of your adjusted gross income before you are able to receive any tax benefit from them. If you are self-employed, however, you can deduct 100% of your health insurance premiums regardless of whether they amount to 7.5% of your AGI. In fact, you do not even have to itemize to take that tax deduction.
There are also other tax deductions that you may be able to take as well. If you have higher education expenses and if your adjusted gross income is $65,000 or less as an individual or $130,000 on a joint return then you may be able to take tax deductions for as much as $4,000 of higher-education expenses.
Other possible tax deductions are related to casualty losses like destruction from hurricanes, tornadoes and floods. If your area was declared as a disaster area by the President of the United States, then you can claim the loss on your tax return.
Finally, if you own a home make sure you do not overlook the ability to take a deduction on the interest on your mortgage. Your mortgage company should have sent you a statement detailing the amount paid in interest for the previous year.
Making sure that you do not overlook any possible tax deductions is an important way to keep your tax bill as low as possible as well as to help you possibly get a refund on your taxes which may be due to you.
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