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Three of the Most Common Deductions that Taxpayers Often Miss

There are a number of tax deductions available but many people don't take them because they don't have any idea that such exist. Oftentimes, they learn about those deductions on...
Views: 1.565 Created 12/12/2008

There are a number of tax deductions available but many people don't take them because they don't have any idea that such exist. Oftentimes, they learn about those deductions only when it's already too late. It's understandable that they don't know about them simply because there are a number of deductions that can be legally claimed. In the same way that there are too many tax laws to take note, there are nearly as many different types of deductions that we can take. Unfortunately, most people claim for absurd tax deductions that aren't commonly accepted by the IRS. Fortunately, there are still many other deductions that you can claim on your tax return. Below is a short list of three.

First, make sure you reflect in your tax return any donation, aside from cash, given to a charitable organization. Donations paid using your credit card are also included in this provision. Be careful of the fact, however, that the deduction must be claimed on the same year the donation was made, and not when the bill was fully paid.

Make sure that the charity gives you a receipt that will reflect the donations that you have given them. For charged transactions, you can also ask your credit card company to give you the necessary record. Be aware though that this type of deduction also covers actual items donated. Hence, deciding to donate furniture and old clothes is definitely a good idea as you will be entitled to a tax deduction on this, to some degree. Just remember to get proof that the donation was indeed made, or else, you'll have no sure way of keeping that deduction. Also, make sure that items given to charitable institutions are in good condition or the IRS will not consider this move as something that will merit a tax deduction.

You'll also be able to get a deduction on a certain percentage of the amount that results from refinancing your home. For instance, if you refinanced your home on June 1st and refinanced it for a 20-year term, then after minor calculations, seven of those 240 months will be after December 31st. Now, if your new points caused you to have to pay $2,400, then you can actually deduct $70 for that year, basically, $10 per month for each of those seven months. You will be authorized to deduct around $20 for each year until all of that $2,400 or all of those points have been completely deducted.

One deduction that people commonly miss taking because of special criteria is their health insurance premiums. In reality, you can actually claim deductions for these, and even premiums for long-term care. As long as you meet certain requirements, you may make use of these to substantially reduce your taxes. After which, these amounts should then be incorporated in your medical expenses. Also, before any deduction can be enjoyed, your total medical expenses should be over $7.5% of your adjusted gross income, or AGI.

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