One of the most misunderstood areas of income taxation is the fact the IRS allows you to deduct certain expenses from your income before you calculate the taxes you owe. The vast majority of people opt to take the standard deduction that is provided. This deduction is adjusted annually for inflation. This is all well and good, but a lot of taxpayers shortchange themselves by taking this deduction. Some feel it's too complicated to deal with, or that it will end up causing an audit. But understand, that you can save substantial amounts of money by itemizing your deductions. And with software packages such as Turbo Tax, it's not all that difficult to do.
The 6 key deductions you may be qualified to take include:
1. Medical Expenses
This not only includes doctor and hospital bills. It includes certain travel expenses, education expenses for learning disabled children, wigs for chemotherapy patients, guide dogs and even clarinet lessons to alleviate severe malocclusion. The point here is that there are many, many medical related expenses you can deduct.
2. Home Mortgage Interest
You can deduct interest on your first and second residences, but you must actually live there. Primary residence and summer home, for example.
3. Certain state and local taxes
Income taxes, real estate taxes and taxes on personal property are all deductible.
4. Charitable contributions
You are entitled to take an income tax deduction anytime you give money or property to a charitable organization. But, you've got to keep very accurate records when taking this type of deductions. Receipts or cancelled checks are important here.
5. Casualty losses
If your home burns down or is otherwise damaged or destroyed, you will be able to get some tax relief. Check with your CPA or tax advisor to see how much you can deduct.
6. Miscellaneous itemized deductions
Most of these costs, such as tax prep fees, safe deposit box rentals, union dues and investment advice are deductible, but you've got to subtract 2% of your adjusted gross income from the total for this category. Certain deductions are no allowed, such as haircuts and gambling losses. Check with your CPA or tax advisor as to what you can and can't deduct.
The 6 key deductions you may be qualified to take include:
1. Medical Expenses
This not only includes doctor and hospital bills. It includes certain travel expenses, education expenses for learning disabled children, wigs for chemotherapy patients, guide dogs and even clarinet lessons to alleviate severe malocclusion. The point here is that there are many, many medical related expenses you can deduct.
2. Home Mortgage Interest
You can deduct interest on your first and second residences, but you must actually live there. Primary residence and summer home, for example.
3. Certain state and local taxes
Income taxes, real estate taxes and taxes on personal property are all deductible.
4. Charitable contributions
You are entitled to take an income tax deduction anytime you give money or property to a charitable organization. But, you've got to keep very accurate records when taking this type of deductions. Receipts or cancelled checks are important here.
5. Casualty losses
If your home burns down or is otherwise damaged or destroyed, you will be able to get some tax relief. Check with your CPA or tax advisor to see how much you can deduct.
6. Miscellaneous itemized deductions
Most of these costs, such as tax prep fees, safe deposit box rentals, union dues and investment advice are deductible, but you've got to subtract 2% of your adjusted gross income from the total for this category. Certain deductions are no allowed, such as haircuts and gambling losses. Check with your CPA or tax advisor as to what you can and can't deduct.
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