- Deductions take the sting out of paying taxes.tax forms image by Chad McDermott from Fotolia.com
Tax deductions reduce your tax bill when April 15th rolls around. The Internal Revenue Service (IRS) allows you to itemize deductions by filing Schedule A Form 1040 with your federal taxes (see Resources). You should speak with a certified tax preparer for information on allowable tax deductions. Trying to get a deduction you aren’t eligible for is tax fraud. You won’t qualify for every deduction, but it’s worth your time to learn which deductions apply to you.
Medical and Dental Expenses
- According to the IRS, expenses for prevention or reduction of physical or mental illnesses are deductible. You may deduct the expenses only if treatment is mandatory. Take a weight-loss program, for example. The program is deductible if your doctor officially diagnoses you with a disease such as obesity. The program isn’t deductible if you participate just because you want to lose weight. The expenses are deductible if you paid for yourself, your dependents or your spouse. Acceptable expenses include fees to psychologists, psychiatrists, chiropractors, surgeons, dentists and doctors. Hospital services, long-term care services and laboratory fees also are deductible. You also can deduct the costs of items such as hearing aids, wheelchairs, dentures and prescription eyeglasses and contact lenses.
Loss from Theft or Causality
- The IRS allows you to deduct losses caused by theft or disaster that affect your home, car or household items. According to the IRS, events covered by insurance aren’t deductible unless you file a claim and reduce the deduction by the amount of the reimbursement. Normal wear and tear doesn’t qualify for this deduction. If termites destroy your floor, you cannot claim that as a loss. The loss must result from a natural or an unexpected disaster, such as an earthquake, hurricane or flood. Loss caused by vandalism or theft is deductible as well.
- You may be able to deduct expenses for using part of your home for business purposes. To meet this requirement, you must use part of your home exclusively and regularly for business purposes. Acceptable business purposes include meeting with clients, customers or patients, and performing actions related to your trade or business. You cannot deduct parts of your home used for both business and personal purposes. If you are a writer that composes articles in your kitchen, you may not deduct your kitchen as a home business expense.
Continuing Education Expenses
- Work-related educational expenses are sometimes deductible. Education expenses are deductible if the education helps improve your job performance. The expenses also are deductible if you’re required by law or by your employer to participate in the class or the course. The expense isn’t deductible if the class or the course is to prepare you for a new business or trade.