Common Federal Income Tax Deductions
Over the weekend, I spent a couple hours pulling together tax records and wracking my brain to make sure that I don’t forget anything. Since I’m sure I’m not alone in this, I thought I’d put together a list of common tax deductions that many people qualify for. Keep in mind that this list is just a start, and that you’ll also want to verify that your eligibility before claiming them.
First up, some common federal tax deductions that you can take whether or not you itemize (as Curtis points out, these are technically ‘adjustments‘ as opposed to deductions):
- Retirement contributions (Traditional or SEP-IRA, 401(k), etc.)
- Student loan interest (up to $2,500/year on qualified student loans)
- Capital losses (realized losses can offset unlimited capital gains or $3,000 in income)
- Business expenses (business owners and employees with certain un-reimbursed expenses)
Next, some common deductions that you can take if you itemize:
- Home mortgage deduction (deduct interest paid during the year)
- Home equity loan deduction (deduct interest paid during the year)
- State and local taxes (or sales tax if that works out better for you)
- Charitable contributions (cash and property donated to a qualified organization)
- Medical expenses (deduct those in excess of (7.5% of your AGI)
- Personal casualty and theft losses (deduct your loss minus insurance payments)
Note that some of these deductions are subject to income limitations or other restrictions. For a more complete list of federal income tax deductions and adjustments, as well as details relating to each of those listed above, see IRS Publication 17.
Update: I’ve also put together a list of twelve commonly missed income tax deductions.
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Modified on June 23rd, 2011 - 21 Comments
Filed under: Taxes
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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January 29th, 2008 at 7:11 am
You may not be aware thatif your adjusted gross income for 2007 was less than $54,000, you can use Free File at the IRS website to process and file your federal tax return at no charge.
January 29th, 2008 at 7:31 am
I greatly dislike the income restrictions that are put on these deductions and tax credits. It seems my wife and I edge ourselves out of most of them just for being successful. Why penalize those who do the most for our economy? This is the kind of tax code that brought us the 70’s.
January 29th, 2008 at 7:39 am
Freak,
If you did not pay more taxes then who would?
Someone has to. That is the reason for tax codes, to generate revenue.
saladdin
January 29th, 2008 at 9:08 am
Your first list are actually not deductions, but adjustments. I posted last week about the three categories of tax write-offs. Adjustments come off from your Gross Income. Deductions from your Adjustested Gross Income if you are above the standard deduction. And Credits come off of the total tax due.
January 29th, 2008 at 11:39 am
I don’t need deductions, I need CREDITS!
(good luck with that)
January 31st, 2008 at 6:09 pm
I might be able to deduct my sales tax this year ( finally! ). I think I paid enough mortgage interest to itemize deductions. Thanks for the reminder.
February 7th, 2009 at 5:58 pm
This was very helpful to me! I don’t usually itemize my deductions, because I’m young and single with no kids and not a homeowner. Even though I give a decent amount to charity, it never adds up to more than the standard deduction. I used to just use 1040EZ (or telefile before they did away with it).
This year I am in a fellowship instead of a regular job, so I have been paying for my own health insurance and contributing to my retirement out of pocket. I need to use the real 1040 this year!
Thanks for your article! I was able to add to adjustments – the IRA deduction and student loan interest deduction (which I could have been doing for years!). I also checked my medical expenses, but it doesn’t exceed the 7.5%.
Anyway, I am happy because I am able to add some adjustments without the hassle of itemizing, and I still get the standard deduction. Thanks again!
February 16th, 2009 at 11:09 am
I read in the paper Sunday that if you own your home. therefore, paid property taxes, but cannot itemize, that you can increase your standard deduction. Can you tell me more on this subject?
February 25th, 2009 at 10:40 am
with obama giving out free grants, if a person qualifies for one to pay bills, is that amount granted, considered as income on your income taxes for that year?
March 13th, 2009 at 1:42 pm
I heard on TV I think it was on Good Morning America, a lady who gives financial advice. She said if you own your home you would be eligible for $1500 deduction. If you were a first time home buyer you could receive $7000 tax credit which had to be paid back over a period of 15 years at $500. My tax preparer does not know anything about the $1500 deduction allowed for home owners. Where could I find this info.
March 14th, 2009 at 12:29 pm
Does everyone realize how many taxes there are on every person throughout their careers? They include sales tax, income tax, state tax, local tax, excise tax, inheiritance tax, capital gains tax, gas tax, and literally dozens more!
Think about it……..100 years ago there were zero, zilch, nada, zippo taxes and everyone got along just fine in life.
April 13th, 2009 at 4:42 pm
SKS – Everyone got along just fine? I’m not sure where you got your information from but I don’t believe things were “just fine”….
April 19th, 2009 at 11:19 am
I am ordering a headstone for my wife and me. Is the total cost deductible ? Is there any tax break, the stones are very expesive ie. small marble is going to cost 5,300.00.
L Dufort
April 24th, 2009 at 6:47 pm
I am paying to have my home hooked up to the city sewage. Is this tax deductible?
February 16th, 2010 at 6:23 pm
Hi, how can I deduct “maintenance/upkeep” on annualized “pet expenses” as I claimed two dependents (both my cat and dog) this year.
If mid-year I obtained a fish / bowl, can I write off the bowl and sprinkle-food I buy?
o.O “woof woof”
March 9th, 2010 at 3:18 pm
can i deduct interest paid on my credit cards?
March 15th, 2010 at 9:46 am
“100 years ago there were zero, zilch, nada, zippo taxes and everyone got along just fine in life”
Repeating that false claim again? There’s been taxes since before the US was a country. Sounds like you should have invested in an education.
April 17th, 2010 at 10:33 am
I have already filed my taxes this year (Thank you AARP) and found $279.00 in medical expense that I did not claim. What form do I use to file this, I did not go short form. I used an itemized tad deduction.
Thank you!
January 13th, 2012 at 5:05 pm
When I travel for business, I must pay a petsitter. My company does not cover these expenses as part of my travel. Can I itemize this necessary expense? May be a silly question, but it ends up being big bucks each year.
April 4th, 2012 at 1:37 pm
I use my Medicare supplement insurance premiums to bunch by pre – paying in December for the coming year plus the normal deposit I make at the beginning of the current year. My tax advisor says I can’t use the insurance costs to bunch.
Thank you
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