Federal Income Tax Deductions
Before you prepare your tax return this year, find out if you may reduce your tax liability by taking qualified federal tax deductions. If you keep good records and you understand what deductions to declare, you can save money at tax time. Certain health related costs and taxes you paid during the year are examples of federal tax deductions. Learn more about how you may benefit from federal tax deductions.
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Taxes
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Real estate taxes you paid during the year are deductible on your federal tax return when you itemized your deductions using Schedule A. State and local income taxes, general sales taxes and other property taxes, such as automobile excise tax, are also federal deductions.
Interest
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Interest you pay on you home mortgage and your home equity loan or line of credit is a tax deduction. What you paid in points in connection with your mortgage loan (or your refinanced mortgage) is a federal tax deduction. Interest on a student loan may be deductible if you meet required income limitations.
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Healthcare
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If your out-of-pocket healthcare related expenses add up to 7.5 percent or more of your adjusted gross income, they are eligible tax deductions. You may deduct payments you made for medical and dental care for yourself or your dependents. Health insurance premiums, hospital expenses and co-pays are deducible costs as well. You may only deduct health related expenses that are not paid for by your medical insurance company.
Business Expenses
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As an employee, the money you spend on uniforms, union dues and trade magazines is deductible on you federal tax return. If you relocate to take a job that is in your industry, you may deduct your moving expenses. The cost of business travel, lodging and meals may be deducted within certain guidelines.
Charity
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Donations you make to charity are deductible on Schedule A. You must keep careful records and receipts to document your contributions. Deductions are limited to the fair market value of your donations. You may take a mileage deduction for charity related travel.
Losses
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If you are the victim of a natural disaster or you have incurred losses through theft or vandalism, you are entitled to a tax deduction. Losses which are reimbursed to you by your insurance company are not deductible on your federal tax return.
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