Some Common Personal Income Tax Deductions

If you want to maximize your tax refund this year, you're going to have to take advantage of all the deductions available to you on your tax return. Yes, this tidbit of advice may seem obvious, but you'd be surprised how many people neglect common deductions that the IRS allows. Listed below are some oft-overlooked deductions that could be valuable to you. If you're eligible for them, put them to good use:

  • Medical expenses - If you itemize deductions, you can deduct the amount of your medical expenses for the year that exceed 7.5% of your adjusted gross income. This may seem high, but if you have surgeries or other procedures or must purchase expensive medications each month, it can add up quickly. Don't forget the costs of your regular doctor visits, also.
  • State income or sales tax - If you itemize, you can deduct the total amount of your state income taxes OR the total sales taxes paid from your federal return. If you live in a state which doesn't levy income taxes, be sure to deduct your total sales taxes paid.
  • Charitable contributions - Don't forget small donations, they add up. For example, if you mail your PTA's monthly newsletter at your own expense, deduct the cost of the stamps; if you cook items for their bake sale, you can deduct the cost of the ingredients.
  • Moving expenses - You can deduct moving expenses if your new job is at least 50 miles further from your previous home than your old job was from your previous home, and you worked full-time for at least 39 weeks of the twelve months following the move.
  • Refinance points - Points paid for refinancing your home can be deducted over the life of your mortgage.
  • Jury-duty compensation paid to your employer - If you serve on a jury and turn over your jury-duty pay to your employer while they continue your salary, you can deduct the jury pay.
  • Estate tax on the income of a decedent - If you inherited, for example, an IRA from someone whose estate is big enough to be subject to federal estate taxes, contact a tax professional immediately concerning this deduction.
  • Reinvested dividends - While not technically a deduction, if you neglect to include your reinvested dividends in your basis, you may very well overpay your taxes.
  • College tuition - You can deduct up to $4000 per year (as of this writing) paid for college tuition for yourself, your spouse, or any dependents. This is a great deduction to use if you don't otherwise qualify for the Hope or Lifetime Learning credits.
  • Student loan interest - You can deduct interest paid up to $2500 (the limit as of this writing).
  • Educator expenses - If you're a teachers and teacher's aide, you can deduct $250 (again, the current limit) for classroom supplies whether or not you itemize.
  • Military Reservist travel expenses - If you're a reservist or member of the National Guard, you may qualify to deduct your travel expenses to and from meetings and drills.

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