How to Claim Tax Deductions
You may take qualified federal income tax deductions whether you are an employee, a business owner, an independent contractor or a retired person. As long as you understand how the IRS defines a deductible expense, and you know which forms to use, you may reduce your taxable income by claiming appropriate tax deductions. Take steps to organize your deductions by breaking them down into categories.
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Instructions
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Compile employee business expenses. When you maintain a record of qualified costs throughout the year, deduct your expenses using federal tax Form 1040, Schedule A and Form 2106. Schedule A allows you to deduct costs such as uniforms, union dues and job-related education. Use Form 2106 to calculate allowable costs for vehicle expenses, business travel, meals and lodging.
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Calculate costs associated with operating a business and claim your deductions on schedule C. Qualified deductions include business-related vehicle expenses, home office expenses, the cost of marketing your business and some business losses.
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Gather records to support deductions for home mortgage interest, real estate taxes, charitable giving, and state and local income tax you paid during the tax year. Use Form 1040, Schedule A to itemize these deductions. Calculate your medical expenses for the year. If they amount to more than 7.5 percent of your adjusted gross income, you may claim those expenses. You may also deduct personal losses due to theft or natural disaster using Schedule A.
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Account for any contributions you (and your spouse if your file jointly) made to your individual retirements account (IRA). If you are not covered by a retirement plan at work, you may fully deduct contributions to your traditional IRA regardless of your income. Take the income adjustment on line 32 of Form 1040. If you are covered by a retirement plan at work, your IRA deduction may be limited based on your income. Roth IRA contributions are not deductible.
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Use Form 1040 to include an income adjustment for up to $2,500 for student loan interest you paid. Your lender will send you Form 1098-INT indicating what you paid in interest for the year. On Form 1040, claim the cost of self-employed health insurance coverage and contributions you made to a health savings account.
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