Things You Can Write Off on Taxes

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Deductions listed on your tax return can be itemized deductions, which means you have to forgo the standard deduction on your tax return should you decide to itemize. You should only take an itemized deduction if the total of all of your itemized deductions are greater than the standard deduction.

Mortgage Interest

  • If your mortgage was issued before Oct. 13, 1987, this is called grandfathered debt, and all of the interest on the mortgage is deductible. For mortgages qualifying as home acquisition debt issued after Oct. 13, 1987 and up through 2012, only the interest on the first $1 million (the first $500,000 if you are married filing separately) is deductible. Grandfathered debt can be included in this equation.

Charitable Donations

  • If you donate to a charity, deduct the fair market value of your cash or property contributions. Get a receipt from the charitable organization. If you claim a deduction for a donation of goods or property over $5,000, you must have it appraised first to determine its fair market value.

Medical Expenses

  • If you paid for medical care for yourself, your spouse and any dependents that exceeded 7.5 percent of your adjusted gross income, deduct it from your taxable income. For example, if your adjusted gross income was $65,000 and you had $6,000 in medical expenses, you could deduct $1,125 ($65,000 times 7.5 percent equals $4,875, then $6,000 minus $4,875 equals $1,125 of deductible expense).

Mortgage Points

  • If you pay for discount points on your mortgage, you can deduct the cost. If the points were paid for a first mortgage, you can deduct the points in the year you pay them. If they were for a refinanced loan, you must deduct them over the life of the loan.

State Taxes

  • You may claim your state and local income taxes paid an itemized deduction, or you may itemize state and local sales tax; you cannot claim both.

Standard Deduction

  • The standard deduction for the 2012 tax year is generally $5,950 for single filers, $11,900 for married filing jointly or qualified widower and $8,700 for head of household. Certain conditions apply, so review IRS Publication 501 to determine your standard deduction to see if would be beneficial to take the standard deduction or to itemize your deductions.

References

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