The Internal Revenue Service allows individuals to take tax deductions to reduce their taxable income for several expenses. These deductions are either above-the-line deductions or itemized deductions. Above-the-line deductions are preferable because you do not have to give up the standard deduction to claim them. If you chose to claim one or more itemized deductions, you cannot take the standard deduction.
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If you pay for the college expenses for yourself, your spouse or a family member, you can deduct up to $4,000 from your taxes as an above-the-line deduction. To take the deduction, the expenses must be for tuition or required fees. You cannot deduct the cost of housing or food. To take the deduction, you must file using a Form 1040 or Form 1040A. You cannot claim this deduction in the same year that you claim a Hope Credit or Lifetime Learning Credit.
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If you spend more than 7.5 percent of your adjusted gross income on medical or dental expenses, you can deduct the costs above that threshold if you itemize your deductions. For example, if you make $90,000 and have $10,000 in medical expenses, you can deduct $3,250. Qualifying expenses include both preventive care and treatments for you and your dependents. You must take the deduction in the year that you pay for the treatment, no matter when the care is actually given. You can also deduct the miles that you drove to reach medical care. For 2010, the per mile rate is 16.5 cents (19 cents per mile for 2011).
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If you work in a kindergarten through 12 grade school, you can take an above-the-line deduction for money you spend on supplies for your job. To claim this deduction, you must have worked in a school as a teacher, aide, counselor or administrator for at least 900 hours during the year and the deduction is capped at $250.
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If you move for reasons related to employment, you may be eligible to deduct some of the costs of your move.To be eligible, your new job must be at least 50 miles further away from your old home than your old job, you must start a new job within one year of moving, and you must work full-time for 39 of the first 52 weeks you live in your new house. If eligible, you can deduct your expenses incurred for moving your belongings and driving one time from your old house to your new house. For 2010, the per mile rate is 16.5 cents; for 2011 it's 19 cents. Moving expenses are an above-the-line deduction.
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If you are self-employed, you are responsible for paying the entire Social Security tax and Medicare tax by yourself instead of splitting the cost with your employer. To compensate for this increased cost, the IRS allows you to deduct half of the amount you pay in self-employment taxes from your adjusted gross income on your individual income tax. This deduction does not affect the amount you pay in self-employment taxes.
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