Three of the Most Common Deductions that Taxpayers Often Miss

There are a number of tax deductions available but many taxpayers do not take them because they do not have any idea that such exist. Often they only learn about a deduction that they could have taken days after they filed their taxes while in the middle of a conversation with a co-worker or a friend. It is completely understandable that most people do not know about too many of the deductions that they can legally take. Because there are several tax laws to keep in mind, there are also various deductions connected with them. Unfortunately for some reason, the absurd ones that people claim, like deducting donated body parts, are not legally accepted by the IRS. Fortunately, there are still other deductions that you can claim on your tax return. Below is a short list of three.

First, be sure that you reflect in your tax return any donation, aside from cash, given to a charitable organization. This includes those items that were paid using 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 secure from the charitable institution a written receipt of the donations that you have given to them. For charged transactions, you can also ask your credit card company to give you the needed record. Remember though that this type of deduction also applies to actual items donated. Therefore, deciding to donate furniture and old clothes is certainly a good idea as you'll be entitled to a tax deduction on this, to some degree. Just remember to get evidence that the donation was indeed made, or else, you will have no definite way of keeping that deduction. In addition, make sure that items donated are in good condition or the IRS won't consider this move as something that will merit a tax deduction.

A home refinance will let you claim for a deduction equal to a certain percentage of the new points earned. For example, if you've refinanced your home for a 20-year term on June 1st, you may apply for a deduction worth 7 months, which is until December 31 of the same year. A deduction equal to $70, or $10 for each of the 7 months, can be availed of if the new points require you to pay $2,400 for the 20-year term. In the same way, you'll be authorized to deduct $20 for each year, or until $2,400 will be completely paid.

One deduction that people commonly miss taking because of special requirements is their health insurance premiums. Actually, you may claim deductions for these, and even for premiums related to long-term care. So long as you meet specific criteria, you may make use of these to significantly reduce your taxes. After which, these amounts must then be added to your medical expenses. In addition, the total of your medical expenses must be over 7.5% of your AGI (adjusted gross income) before any deduction or tax benefit can be availed of.

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