Tax preparation can be stressful, so we’re not surprised that many do-it- yourself filers opt for the
standard tax deduction over the itemized version. Although taking a standard deduction gives you a
general picture of your finances and it’s easy to claim, this method can short change you of hard earned
money you might otherwise have received if you’d itemized your deductions.
Don’t wait until the last minute to get started on your taxes; start looking into your itemized deductions
today before tax season hits!
What is the standard tax deduction?
A standardized deduction is established by the IRS and reduces your taxable income by a fixed amount,
in theory keeping more of your paycheck in your pocket.
In 2016, the standard deduction for heads of household went up to $9,300 from 2015’s $9,250. For
singles and married partners filing separately, the deduction was $6,300, and for married people the
return was $6,300.
Is it worth the time saved?
From our point of view, we think itemized deductions can benefit you more in the long run, because you
can claim so many fantastic returns. If the total number of deductions you’re claiming exceed the
standard deduction, you should go for the itemized return.
Important tax deductions
If you have a sudden medical expense used to diagnose, prevent, treat, or cure an injury or disease, you
can often deduct the cost from your taxes. You’re eligible to deduct any expenses that are more than
7.5% of your adjusted gross income, and that’s even true of miles spent driving to those medical visits.
The IRS covers medical travel at a rate of nineteen cents per mile.
Employee business expenses
If you’re not able to be reimbursed for a business expense, you can deduct the cost if they’re more than
2% of your adjusted gross income. So consider travel, mileage, equipment, seminars, and materials
directly related to your employment as eligible for this deduction. Save your receipts!
Believe it or not, the state and local income taxes withheld from your paycheck are tax deductible! This
even includes any prior year’s income taxes paid during the current filing year.
Any car or boat registration that charges you property taxes based on the value of the vehicle are
eligible for a tax deduction, since you’ve already been taxed on that property. With expensive vehicles,
this can really add up.
Not only does giving back make you feel good, you’re also exempt from paying taxes on that money.
Hang onto those receipts for all fair market donations or contributions. Additionally, if you did volunteer
work you can deduct your mileage that related exclusively to your volunteering.
Tax filing services
Did you spend money with a tax preparer? You’re eligible to deduct the cost of that from your taxes as
well! So don’t neglect to talk to a professional tax preparer to get the exact scope of itemized
deductions that apply to your specific situation. You’ll be amazed how much you can deduct with an
expert on your team.