There are many itemized deductions that an individual may be qualified for. The IRS maintains a listing of 500 deductions on it’s website. This article will discuss the five most popular deductions and who qualifies for them.
1) Medical & Dental Expenses.
If one itemizes his or her deductions on Form 1040, Schedule A, he or she may be eligible to deduct expenses paid for medical and dental care for oneself, one’s spouse, or one’s dependents. Generally, these deductions are only allowed for those expenses paid for the prevention or curing of a physical or mental health issue. These deductions count for almost any fees incurred while taking care of these problems, including fees associated with medications and hospital bills. The exception to this rule is that you may not deduct funeral expenses, burial expenses, the cost of medications that were not prescribed by a doctor (or that were obtained over the count), your toiletries and cosmetics, and most types of plastic surgery. It is important that you reduce the amount of your expenses if you did not receive any type of reimbursement for these costs.
2) Casualty and Theft Losses.
These include losses involving or affecting an individual’s home, their household items, or motor vehicle. Those items covered by insurance may not be deducted unless one files a claim for reimbursement. In this case, the reimbursement received must be deducted from the loss total. It is also important to note that normal damage or deterioration of property does not count as tax deductible. Only those damages that were unexpected or sudden may be counted. One must fill out Form 4684 with the IRS in order to claim a casualty or theft loss.
3) Charitable Contributions
These include gifts given to qualifying non-profit organizations. You must itemize these deductions on Form 1040, Schedule A in order to qualify. The individual should be certain that the organization qualifies for tax-exemption donations and one only deducts the donation amount that exceeds the fair market value of any benefits incurred as a result of the donation.
4) Educational Expenses
These expenses may be deducted if they are work-related and are an itemized deduction listed on Form 1040, Schedule A. These expenses only count if they maintain or improve one’s job performance, are required by one’s employer, or by law and do not qualify one for a new job.
5) Miscellaneous Expenses
This is an often overlooked category which include employee expenses that have not been reimbursed, tax preparation fees, and other expenses. All of these are subject to a 2 percent limit and will be listed in Publication 529, Miscellaneous Deductions.
Qualifying for these deductions can be a bit tricky, so it is always a good idea to research further information on these topics and to talk with a tax professional or firm with tax preparation knowledge.