Expenses That Qualify for Tax Deductions
The Internal Revenue Service allows citizens to take off certain expenses from their income in the form of a deduction on their tax returns. Deductions can be divided into two groups: Independent of the standard deduction, also known as above-the-line deductions, and those that cannot be take if the standard deduction is taken.
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Traditional IRA Contributions
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Contributions you make to your traditional IRA are an above-the-line tax deduction. The deduction limit depends on your age and is adjusted to reflect changes in the cost of living. For 2009, the limit is $5,000 for those younger than 50 years old and $6,000 for those who are 50 years old or older.
Educator Expenses
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If you work as a teacher or educational administrator, you can deduct up to $250 for educational expenses. This is an above-the-line deduction, so you can take it regardless of whether you take the standard deduction.
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Giving to Charity
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Donations made to charitable organizations are an itemized deduction. Any donation greater than $250 requires a receipt from the receiving organization stating what was donated, how much was donated, when it was donated and whether the donor received anything in return.
State and Local Taxes
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Any taxes you paid to state and local governments are deductible. Sales taxes, real estate taxes and income taxes are examples of municipal taxes that can be deducted.
Standard Deduction
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The standard deduction is set by the federal government and adjusted annually. If you take the standard deduction, you cannot take any itemized deductions. For 2009, the standard deduction was $5,700 for individuals whose filing status was single or married filing separately, $8,350 for heads of household and $11,400 for married filing jointly.
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