More often than not, when filing your federal taxes you want to itemize your deductions to lower your tax liability, and the more you itemize items for which you have the supporting documentation, the greater chance of reducing tax bill. It is easier to take the standard deduction, but you should first itemize your deductions to see if they exceed the standard deduction. You can claim the higher of your itemized deductions or the standard deduction the Internal Revenue Service (IRS) allows.
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Job & Business Expenses
Union dues, tax preparation fees, safety deposit box fees and other job or work expenses can be deducted on the federal tax return. You can also deduct certain legal fees or educational costs that either maintain or improve your job skills. Keep all documentation and receipts that have to do with these expenses and itemize them when it comes time to fill out your taxes.
Medical and dental expenses that are above 7.5 percent
of your adjusted gross income can be deducted. Total your medical expenses and use Schedule A to see which of these can be deducted. Receipts for prescription drugs and eyeglasses can also be included in the medical and dental expense category.
Interest on mortgage or home equity loans can also be itemized. Use the IRS Form 1098 you received from the bank to itemize interest paid. Investment interest can also be itemized as a deduction on your tax filings.
Any donation to an approved charitable organization can be an itemized deduction. However, make sure you have a receipt from the charity before filing your return. Noncash contributions over $500 must have an IRS Form 8283 completed and included with your return.
The standard deduction established by the Internal Revenue Service changes each year and varies depending on your filing status. You'll need to check the amount you are allowed each year to see if your itemized deductions exceed that amount.