If you prepare your tax returns yourself, either by hand or even with tax software, you are likely to end up paying more than you owe. No matter how much you know about tax law or how detailed your software may be, it is likely that you will miss or forget about certain deductions that could lower your tax bill. Even if you use an accountant or tax preparation service, it is a good idea to ask if you are entitled to the following deductions. No one knows more about your spending habits and expenses than you do, and it is ultimately your responsibility to investigate your eligibility for various deductions or credits under the law.
While some of these deductions are taken “above the line”, which means they reduce your total adjusted gross income on which you pay tax, others are only available if you itemize your deductions. It may be more work up front, but itemizing will almost always get you a larger deduction than if you take the standard flat deduction.
1. Medical Expenses
If your total medical expenses equal more than 7.5% (rising to 10% in 2013) of your adjusted gross income, you can deduct them. This includes health insurance, dental insurance and long-term care insurance premiums, medical equipment or medications taken pursuant to a doctor’s orders, and even some of the expenses incurred traveling to and from medical treatment. [Read more...]