Items you will need
- charitable giving receipts
- Financial tax forms from school
- internet access
In order to properly file your taxes, you must take into account the possible deductions you may qualify for. Without deductions, you could find yourself paying money to the government that you don’t have to owe. The trick is not only finding out what deductions you automatically qualify for, but also the ones you can get by taking a closer look at your financial situation. This article will show you how to calculate income tax deductions.
How to Calculate Income Tax Deductions
Accomplish your total income calculations. This includes information on your W-2s, 1099s, and any other special income such as prize winnings and alimony.
Find your standard deduction and write it down. There is a standard deduction amount that the IRS lists every tax year. For example, the 2009 standard deduction for a single member under 65 with no dependents is $5,350. See the additional resources below to find your specific deduction.
Review any possible general deductions you may have. Student loan interest is deductible, as well as retirement contributions to IRAs. Your student loan holder will usually send you a tax form showing the interest paid. If you ran a business from home, there are a number of possible deductions for mileage on your vehicle, business supplies, advertising fees and even some meals provided.
Consider itemized deductions that you can compare to your standard deduction. The more common deductions include interest on mortgage payments, charitable giving and certain state or sales taxes. In some cases you can deduct qualified medical expenses if they amount to more than 7.5% of your adjusted gross income.
Double check any special deductions you may qualify for. These include moving deductions if you meet specific distance and time measurements; tax preparation expenses; uniform purchases; and casualty and loss expenses.
Check your state taxes for any other special deductions. They vary from state to state. Certain states like North Carolina will give you deductions if you live on coastal lands and help preserve them. A charitable deduction to the Indiana University School of Medicine can account for a special deduction in the Indiana State Income Taxes for 2009.
Use tax preparation software recommended by the IRS or a professional tax preparer. In some instances you can qualify to file for free.
Purposefully misrepresenting your income tax returns can result in fines or jail time.