Income Tax Deduction Information
- The rule is to always take what is most beneficial to your tax situation. Generally speaking, if you do not have large deductions, such as home mortgage interest, it is often best to take the standard deduction. The standard deduction amount depends on your filing status, whether you have have dependents and may be higher if you have special circumstances. Itemized deductions will require supporting documentation, such as receipts and or statements, that show proof of the expense.
- If you itemize you can claim out-of-pocket medical and dental expenses as long as they exceed 7 percent of your adjusted gross income. You cannot deduct your insurance premiums unless you are self insured and pay 100 percent of the premium. Deductible expenses include but are not limited to hospitalization, prescriptions and X-rays.
- Home mortgage interest and investment interest are deductible on an itemized return. As long as you are legally responsible for the repayment of the loan, you can write off the interest you paid during the tax year. You can also deduct any prepayment penalties or late fees you incurred for a late mortgage payment. Personal interest is not deductible.
- If you have a qualified student loan and your modified adjusted gross income is less than $75,000, you are eligible to deduct your loan interest. Tuition and fees can be deducted for yourself or your qualified dependent. Education expenses are actually adjustments to your gross income and therefore are calculated before you decide whether to take a standard or itemized deduction. Be aware that if your filing status is married filing separately you are not eligible to take education expense deductions.
- Unreimbursed employee expenses, such as legal fees, job education expenses or licensing fees, can be deducted as long as they exceed the 2 percent of your adjusted gross income. Job search expenses and tax preparation fees are also part of this deduction category.
