There are several expenses you are allowed to itemize on your tax return that will reduce the amount of income on which you are taxed. These include: medical expenses, non business taxes, charitable contributions, and miscellaneous expenses. The following paragraphs provide a brief overview of each category. Medical expenses: You can deduct expenses you paid for medical care during the year for yourself, your spouse, and your dependents. Medical expenses include payments to doctors for treatment and prevention of diseases, cost of equipment and supplies for medical care purposes, as well as insurance premiums paid for medical care or qualified long term care insurance.
For a complete list of qualified medical expenses, go HERE. However, only the amount by which your total medical expenses for the year exceed 10% of your adjusted gross income are deductible. Non Business Taxes: The five types of deductible non business taxes are: State, local and foreign real estate taxes, State, and local personal property taxes, State, local and foreign income taxes or State and local sales taxes, and Qualified motor vehicle taxes. In order for these taxes to be deductible, you must have paid them during the tax year. Interest: Qualified Residence interest or home mortgage interest is deductible, as long as the acquisition debt does not exceed $1 million. If you refinanced your mortgage or purchased a new home, “points” paid (prepaid interest) may be deductible in the current year or over the life of the loan. Mortgage interest paid is reported to you by your lender on Form 1098.
Important Note: personal interest is not deductible-such as interest on personal credit cards and vehicles. Charitable Contributions: For contributions to be deductible, you must give cash, check, or other monetary gift to a qualified tax exempt organization. You must also keep a record of your contribution, such as a receipt from the organization or canceled check from your bank to prove the amount, the date, and the name of the organization you contributed to. For non cash contributions, like clothing or household items given to Goodwill or other charitable organizations, you must have a receipt from the organization and list of items you gave, the date, and value of the items donated. Miscellaneous Expenses: There are three types of expenses that fall into this category: unreimbursed employee expenses, tax preparation fees, and other expenses. Items under this category need to exceed 2% of your adjusted gross income in order to be deductible. More in-depth information on each of these categories HERE.
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