Note: This article is not an extensive list on itemized deductions. For more extensive help figuring out your itemized deductions for 2017 or 2018, meet with Tom.
Itemized deductions are one tiny facet of your tax returns, although they require a considerable amount of upkeep from the taxpayer. Located on Form 1040, Schedule A, itemized deductions allow you to possibly deduct a larger amount from your taxes. Instead of taking a standard deduction, you are allowed to take an itemized deduction if its value is greater. The Internal Revenue Service has a nifty tool to help you figure out what your standard deduction is.
Deductible items include the amount you paid in real estate property taxes, vehicle registration taxes, mortgage interest and medical expenses. They also include charitable contributions to 501(c)(3) non-profit organizations.
Deductible medical expenses include payments for treating, diagnosing, curing, limiting or preventing a disease. They also include payments for treatments affecting the function and structure of your body.
These deductions do not include any other over-the-counter drugs that do not require a prescription. You cannot deduct toothpaste, toiletries and most cosmetic surgeries. Likewise, you cannot deduct most burial or funeral expenses.
You’re allowed to deduct the total medical expenses that are greater than 7.5% of the value of your adjusted gross income.
Both cash and non-cash donations are deductible from your taxes. For more information, check out our blog post on charitable contributions.
Pro-tips for itemized deductions
For itemizing prescription drug costs, call your pharmacy and ask for a printed list of all of your prescription expenses for the tax year. This serves to your benefit as you will not have to worry about missing a few items.
Store all papers from purchasing a new vehicle. Also, store all receipts from purchases at the Department of Motor Vehicles. Vehicle registration taxes, as well as the sales tax from your new vehicle purchase, are deductible from your federal tax return.
Your mortgage interest and property taxes are deductible from your federal tax return. Hang on to your mortgage interest statements and property tax statements.
For the biggest pro-tip of all, set up a meeting with Tom for 2018 tax preparation.