How to Maximize Your Tax Deductions

Is tax season getting you down. Look at your children, your house, your office, and all around you. Tax deductions are everywhere. This article will give you an overview of how to maximize your tax deductions and see it it will pay to itemize.

Difficulty: Easy

Instructions

1. First look at what type of standard deduction you are entitled to. Typically the standard deduction for a single person under 65 is $4,850 and it $1,200 more for a person who is 65 or older or who is blind. If you are head of household and under 65 your standard deduction is approximately $7,150; if you are 65 or older or blind it is approximately $1,200 more. If you are married and filing a joint return it is approximately $9,700 unless you are blind or 65 or older in which it increases. If one spouse is 65 or older OR blind it increases by approximately $950. If one spouse is BOTH 65 or older AND blind it increases by approximately $2,850. It both spouses are 65 or older it increases by approximately $2,850. If both spouses are 65 or older and blind it increases approximately $3,800.

2. Now think about what would happen if you itemized. Do you own a home with a mortgage? If so look at your Form 1098 and compare that to your standard deduction. Please be careful because points paid on refinancing your mortgage may not be fully deductible in the year paid. Instead you may need to deduct them over the life of the loan. Please refer to IRS Publication 936. This is available online or at many post offices or libraries.

3. Now look at the income taxes you paid to your state, county, and city. In many cases these are deductible.

4. Now look at all your donations to charitable causes. If you donated items you can look at programs such as TurboTax or ItsDeductible for guidance on the value of the items.

5. Now look at your medical expenses. Do they exceed 7 1/2 percent of your income? If so you they may be deductible. Please make sure not to include costs that were reimbursed by your insurance company. Also please note that your typically can not deducted if you paid it with pre-tax dollars.

6. Next look at miscellaneous deductions such as dues paid to a union or professional organization, subscriptions to magazines related to work, business liability insurance premiums, cost of protective work clothing, depreciation on your computer or cell phone for the portion of time it is used by you for work, cost to get your taxes done etc. Are these over 2% of your adjusted income. In this case subtract 2% of your income from this figure and that is what you may be able to deduct.

7. Now add up all these itemized deductions in steps 2-6 and see if it is larger than your standard deduction. Now pick which gives you the biggest deduction.

Tips & Warnings

• Always consult with your appropriate tax, legal, or other advisor because this is just for guidance and may not be applicable in all cases.

[scottmitzi]

on 3/1/2009 Thanks for the directions. It's always nice to have new things to look into.