What Can Be Deducted From Taxes?

Depending on your circumstances, several tax deductions may be available to you.

Tax season is usually accompanied by anxiety and confusion about how to file your taxes. The tax code is extremely complex and may present challenges for even seasoned professionals. There are major categories of tax deductions, each of which require that certain prerequisites are met to take advantage of the savings. They include the standard, itemized, above-the-line and Schedule C tax deductions, though they may not be available if you use a 1040EZ form.

Standard Tax Deduction

Anyone who files taxes is entitled to a standard deduction, which is relatively simple to understand and varies according to your marital status. The categories include single or married filing separately; married filing jointly or qualifying widow(er); and head of household.

If you file your taxes as single or file separately from your spouse, you will receive a smaller deduction than if you filed as head of household or as married or as a qualifying widow(er). Filing your taxes as married or a qualifying widow(er) entitles you to the largest deduction of the three categories.

Itemized Tax Deductions

There are a number of itemized deductions you can take when you file your taxes. Some of the more popular itemized deductions include charitable contributions, medical expenses, casualty losses and unreimbursed job expenses.

Medical expenses may be deducted from federal income taxes and may include money spent on doctors, prescriptions, hospitals, insurance premiums and nursing home expenses. It is advised that you review IRS Publication 502, Dental and Medical Expenses for a complete list of deductible medical expenses. Find a link in the References section.

Charitable contributions may also be counted as deductions. Real property (land), personal property, cash, and securities may be donated to qualified charitable organizations for a tax deduction.

If you suffered a loss because of theft, fire, storm damage or other casualty, these may be deducted as casualty losses. If the amount lost is more than the sum of $100 and is 10 percent of your adjusted gross income, the value of the items lost may be deducted.

Unreimbursed job expenses such as costs for travel (other than commuting to your job), uniforms, union dues and continuing education may be deducted.

Above-the-Line Tax Deductions

You may choose not to itemize tax deductions and still remain eligible for some above-the-line tax deductions, including student loans; tuition and fees; relocation expenses; contributions to health savings plans; and contributions to an IRA.

Schedule C Tax Deductions

You may file for Schedule C business expense deductions if you own your own business. These deductions may include the costs of advertising, business liability insurance, wages and home office expenses.

Other Deductions

If you are self-employed, own a business, own stocks in a company or gamble, you may be entitled to other tax deductions. Sales taxes may also be deductible under certain circumstances. It is recommended that you consult a tax professional if you have reason to believe you may be eligible for other tax deductions.

References

• H&R Block: Tax Tips
• IRS: Publication 502