How to get everything that’s coming to you from the IRS
Some people take a standard deduction on Schedule A either because it seems easier than itemizing deductions or because their tax preparer advises them that their allowable itemized deductions won’t exceed the standard deduction
Here are some basic tips:
First, be sure you know the standard deduction you should take: Did you know? If you’re over 65, blind or both your standard deduction increases. Be sure to add this in if you turned 65 this year.
Now look at your itemized deductions like property taxes, home mortgage interest, state and local income taxes, charitable donations and medical expenses. They may seem fairly straight forward but even here you could be missing out all of the deductions you are entitled to.
Did you know that in addition to mortgage interest, you can deduct points paid if you refinanced deductible over the life of the loan? Points from financing your home can be found on Form 1098—the Mortgage Interest Statement you receive from your lender. Real estate taxes are deductible, but homeowner’s insurance and homeowner’s association fees are not. Mortgage Insurance premiums are deductible though 2016.
Medical expenses are deductible if unreimbursed expenses exceed 10 percent of your Adjusted Gross Income (AGI). It’s worth doing the math. Your AGI is on the bottom line on page 1 of your 1040.) It includes all taxable income items and selected write-offs like those mentioned above and other things like IRA contributions. If you or your spouse is 65 years or older… or turned 65 during the tax year…you are allowed to deduct unreimbursed medical care expenses that exceed 7.5 percent of your adjusted gross income.
You can write off miscellaneous itemized deductions when (and only when) they exceed 2% of your AGI. Did you know you can take charitable deductions only if you take miscellaneous itemized deductions? According to the IRS, if you qualify for miscellaneous itemized deductions you can also take:
• Unreimbursed employee expenses. For example, your home office expenses if you’re working from home.
• Expenses related to searching for a new job as long as it’s in the same profession.
• Certain work clothes and uniforms.
• Tools needed for your job.
• Union dues and some other professional organizations too.
• Work-related travel and transportation.
The IRS also says some deductions are not subject to the two percent limit. Some expenses on this list include:
• Certain casualty and theft losses. This deduction applies if you held the damaged or stolen property for investment. Property that you hold for investment may include assets such as stocks, bonds and works of art.
• Gambling losses up to the amount of gambling winnings.
• Not surprisingly, you cannot deduct losses from Ponzi-type investment schemes.
And don’t forget! You can deduct what you pay to get your taxes done, whether it’s by a professional or with tax preparation software. You can also deduct the cost of any books or publications that help.
Go online to find IRS Publication 529: Miscellaneous Deductions for more details.