Three of the Most Common Deductions that Taxpayers Often Miss

Every year, there are many tax deductions that many people do not take simply because they have no clue that they exist. More often than not, they learn about those deductions only when it is already too late. It's completely understandable that most people don't know about too many of the deductions that they can legally claim. In the same manner that there are too many tax laws to take note, there are nearly as many different kinds of deductions that we can take. Unfortunately, most people claim for absurd tax deductions that are not widely accepted by the IRS. Here are three of the deductions that are easiest to benefit from.

First, be sure that you reflect in your tax return any donation, other than cash, given to a charitable institution. This includes those items that were charged to your credit card. Be wary 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.

You must also make sure that you have evidence of the donation and you can get this either from the charity or your credit card provider. This deduction not only covers charges made on your credit card, but also to actual items donated to a non-profit organization. Donating your old furniture and clothes to charity is certainly a better idea as opposed to having a garage sale. To a certain extent, these are all deductible. Once again, make sure you secure a written receipt of all donations made. Otherwise, you'll have no chance of claiming for this deduction should the IRS decide to conduct an audit on you. Also, the items that you donate like household goods and clothes should be in at least good or better condition or else, the deduction will not be accepted.

You'll also be able to get a deduction on a certain percentage of the amount that results from a home refinance. For example, if you get a 20-year term home refinance on July 1, you will have seven out of the 240 months after December 31 of the same year. If the new points lead to a debt of $2,400, then you can essentially deduct $10 for each of the seven months, or $70 for the whole year. Until the entire $2,400 or all of the new points have been completely deducted, you're actually allowed to subtract around $20 for each year.

One deduction that people commonly miss taking because of special criteria is their health insurance premiums. Actually, you can claim deductions for these, and even for premiums pertaining to long-term care. You can avail of this tax benefit to significantly reduce your taxes as long as you pass certain criteria. After which, these amounts should then be incorporated in your medical expenses. In addition, before any deduction can be claimed, your total medical expenses must be over $7.5% of your adjusted gross income, or AGI.

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Originally posted 2008-11-02 21:47:40. Republished by Blog Post Promoter

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