In my many years as a Tax Preparer, I have come to understand that the tax code changes every year but the question from the taxpayer stay the same. One of those questions that stays on the Top list is, " Chad, what deductions should I claim on my taxes?" What may be claimed by you in some circumstances may not be claimed by another. It all depends on the taxpayer's situation. In many instances you do not have enough deductions to exceed the Standard Deduction, which is a set number based upon your Filing Status that is given to every taxpayer to deduct from their taxable income. With that being said, should you scrap the whole idea of keeping track of your deductions? The answer is no. In this article I will give you a general and brief glance into what deductions you can claim on your taxes and good rule of thumb as to if you can claim it or not.
Here is a list of the typical deductions claimed on a Income Tax Return;
- Medical Expenses-A lot of people are unaware that, dental and vision fall under this umbrella. How many of you wear prescription glasses?
- Taxes paid to your state? If you are in a state that taxes your income, you can write off what you paid the government!
- Property Taxes-Many taxpayers are confused by this deduction, they believe it to be real estate taxes that are associated with your house. This deduction is not. You may live in a state that charges you tax for property you own other than your house. For example, you car, boat, or motorcycle.
- Real Estate Taxes
- Mortgage Interest
- Mortgage Insurance Premiums-also known as, PMI-Almost everybody has that.
- Cash donations-Church, Wounded Warrior, or ASPCA, etc......
- Non-Cash donations-For example, Goodwill, ARC, and the Disabled Veterans of America.
- Unreimbursed Employee Expenses-You may be employed at a job that requires licensing. For example, a Doctor, Nurse, or CNA. Are you a part of a Union? That's right union dues.
There are many more deductions to be claimed on your taxes in addition to the list, but it all comes down to the taxpayer and their set of expenses. As mentioned before you may have deductions for all these items but you do not have enough expenses to exceed the Standard Deduction. That brings me to the next question. How much do you need to have in deductions for it to have a impact on your taxes? That depends on your Filing Status. This link Standard Deduction will provide you with your target number. A good rule of thumb to follow in this instance is; Do all my deductions exceed my Standard Deduction? If it does, then it's safe to say you should claim your deductions. You'd be surprised how all those little amounts add up! It could be the difference between sending a check to the government or keeping that money in your pocket to pay your rent.
I hope this article will assist you this year and claiming your deductions. Keep a keen eye for my next post, which will be about Tax credits! The tax man from the Rocky Mountains is signing off. In the famous words of Porky Pig, "That's all folks!"