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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.