List of Tax Deductibles - What is Tax Deductible?

Nobody likes to pay taxes, but we all have to. One of the best ways to lower the amount we shell out to the government is to maximize your tax deductions. Sometimes this takes some financial planning. Of course, you will need a list of tax deductibles, too. If you know what is deductible, and keep good records, you will find yourself paying less money to Uncle Sam every year.

First of all, keep up with all receipts you get for medical costs. Any prescription drugs, doctor or hospital co-pays, and many other medical costs, can be deducted. However, if your medical bills do not equal a certain percentage of your adjusted gross income, or AGI, then you cannot deduct them at all. Still, it is wise to keep track of these expenses, just in case you do reach that amount. You could possibly incur a large expense at the end of the year that will make all your expenses deductible.

Some interest expenses should be on the list of tax deductibles. Most interest you pay for your home mortgage is deductible. If you have a home equity line of credit, this interest is typically deducted as well. There are certain limitations, and if you own more than one residence, you must pick one or two to count as deductible (depending on certain circumstances.) Unfortunately for some, personal loans like credit cards and auto loans do not count as deductible interest expense. However, student loan debt will typically count toward your deductions. If you pay anything towards education, you should hold on to the receipts, and ask your tax professional whether or not it goes on the list of tax deductibles.

Charitable contributions, which typically mean money or other items donated to non-profit organizations, are usually deductible. Again, it is vital to keep all receipts for these donations, in case you are audited. These donations are deductible, with certain limitations, so it is wise to ask your tax professional about the possible affect large donations may have on your tax bill.

Another important fact to remember is that you should not itemize your deductions if they will not exceed the standard deduction. Taxpayers are allowed this deduction by law, and the extra work that goes into keeping good records is for nothing if you are taking the standard deduction. This is another situation to discuss with an accountant. If you consistently take the standard deduction, and do not donate much or have many medical bills, it may not be worth it to keep such careful records.

Remember that knowing what is deductible is important. Good record keeping is important, as well. If you do not keep your receipts, you may have to repay a refund or pay taxes when you are audited. Deductions are a great way to lower the taxes you pay each year, so it is a great idea to keep up with them!