Are You Missing Federal Income Tax Deductions?

As you prepare to file this year, do you know if you have taken all the federal income tax deductions that are available to you?

There are a lot of things you can deduct from your income taxes every year but few people take all the deductions they qualify for. Some don't realize just what deductions they can take. Others don't know what goes into claiming deductions, so they instead just pass on the concept, thinking it must be difficult.

But there are a lot of things you can deduct, like:

Charitable donations

Loss to theft

Business expenses

Medical expenses

If taking more deductions on your federal income tax returns has been something you've wanted to look into, here are a few things you need to know about the process.

Standard or Itemized Deductions

There are two kinds of deduction options on your income taxes. The first is standard. This is the deduction that you are granted by the federal government. For most people this is enough to cover many of the things they would have deducted anyways. An itemized deduction is one in which you will need to make a list of all your deductions and do the math to come up with your total. If you have a lot of deductions, this is the way you want to go to make sure you get the best return.

Keep in mind, your income does come into play with the amount of deductions you are allowed to take. If your income is higher than $75,000 for an individual or $150,000 for a joint return your deductions may be restricted.

Going Itemized

If you decide itemized deductions are the best option for you, it's time to get your paperwork in line. You can go to the IRS website to download the form 1040 Schedule A, as well as the instructions that go with it (these are often two different files).

Do Your Homework

Once you have that Schedule A instruction booklet, you need to read it carefully. It will detail all the kinds of deductions that can be taken and how to do it properly. Take a written note of all the federal income tax deductions you qualify for.

Do The Math

Now that you know what you can deduct, it's time to write out those deductions in the Schedule A form. Once you have everything listed, double-check your deductions. For some of these items you may only be able to deduct a percentage of the total amount. Check to see you are deducting the right portion of each entry.

Questions?

If you are a little worried about getting the deductions right or are still confused about a few things, you should check the IRS website or call a local IRS office as they usually are more than willing to help you figure it all out.

Short Cuts

If you use tax preparation software, it's very likely the software will have a schedule A form in it that will do the work for you.