When you file your taxes, you have the option to either take the standard deduction or to itemize your deductions. Itemizing your deductions means that you list out all of your qualifying expenses and subtract them from your taxable income, potentially lowering your overall tax bill. Here are some of the itemized deductions you may be able to claim on your taxes:
- Medical and dental expenses: You can deduct expenses for medical and dental care that exceed 7.5% of your adjusted gross income (AGI) for tax year 2021. This includes things like doctor’s visits, prescriptions, and hospital bills.
- State and local taxes: You can deduct up to $10,000 of state and local income, sales, and property taxes.
- Mortgage interest: You can deduct the interest you paid on your mortgage for your primary residence, up to a limit of $750,000 for mortgages taken out after December 15, 2017.
- Charitable contributions: You can deduct donations to qualifying charitable organizations, up to a limit of 60% of your AGI.
- Casualty and theft losses: You may be able to deduct losses from events like natural disasters or theft, but only if they were not reimbursed by insurance.
- Miscellaneous deductions: This includes things like tax preparation fees, investment expenses, and job search expenses, but these deductions are subject to a 2% floor, meaning you can only deduct expenses that exceed 2% of your AGI.
It’s important to note that these deductions may not apply to everyone, as they have different requirements and limitations. Additionally, some of these deductions may be subject to phase-outs or limits based on your income level.
If you’re not sure whether you should itemize your deductions or take the standard deduction, consider using tax preparation software or consulting with a tax professional to determine the best option for your specific situation. Keep in mind that you cannot take both the standard deduction and itemize your deductions, so it’s important to choose the option that will give you the most tax savings.
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