TaxEngine - Most Overlooked Deductions
Are you getting all the deductions you deserve? Find out what you may be missing
Deductions allow you to reduce your taxable income and thus reduce your tax bill.
Most taxpayers are entitled to the standard deduction - a fixed amount that reduces
the amount of income on which you are taxed. However, certain kinds of deductions
are called itemized deductions. If you have enough of them to beat the standard
deduction, it is usually a good idea to itemize instead. For many taxpayers, purchasing
a home is the event that makes itemizing worthwhile.
There are also so-called "above-the-line" deductions, which are different than itemized
deductions. If you qualify, you can claim these deductions even if you don't itemize.
Finally, if you own your own business, some additional deductions apply to you.
Some of them are "above-the-line" deductions and some are claimed directly on your
business schedule, called a Schedule C. (Note: Farmers and owners of rental property
use different schedules.)
The Standard Deduction
- Single or married filing separately, $5,350
- Married filing jointly or qualifying widow(er), $10,700
- Head of household, $7,850
Itemized Deductions
Your mortgage interest and real estate taxes may be your biggest deductions, but
don't forget:
- Medical expenses – in addition to what you've spent on doctors, hospitals, and medicines,
other possibilities are health insurance premiums, prescription eyeglasses and contacts,
hearing aids, medical transportation, equipment for disabled people, and nursing
home expenses
- State and local income taxes and personal property taxes
- Charitable contributions – cash and property donated to charitable organizations,
including household items donated to Goodwill and similar charities
- Out-of-pocket job expenses that were not reimbursed by your employer, including
car expenses (the non-commuting kind), travel expenses, uniforms, union dues, and
continuing education expenses
- Safe-deposit box fees, tax preparation fees, certain legal fees, and other miscellaneous
expenses
"Above the Line" Deductions
Remember, the good news is that you may claim these deductions whether you itemize
or take the standard deduction.
- Student loan interest - up to $2,500
- Tuition and fees deduction - up to $4,000 of qualified higher education expenses
- Moving expenses - the cost of moving your family and belongings to a new job location
- Alimony paid
- Military reservists deduction - a deduction for non-reimbursable travel expenses
for reservists who service more than 100 miles from home and stay overnight
And if you are self-employed...
- One-half of your self-employment (social security and Medicare) tax
- 100% of self-employed health insurance premiums for yourself and family
- Contributions to self-employed retirement plans, such as SEPs, SIMPLEs, and defined-contribution
plans
Schedule C Deductions
If you own your own business, don't forget:
- Advertising and promotional costs
- Business liability insurance
- Legal and professional services
- Car and truck expenses
- Wages, employment taxes, employee benefit plans, and contributions to employee retirement
plans
- Home office expenses