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When preparing their taxes, filers often forget to gather receipts for valuable itemized tax deductions. While the vast majority of taxpayers will now take the standard deduction instead of itemizing under tax reform, taxpayers may still be able to maximize their tax deductions by taking more time to gather receipts for deductible expenses,
The standard tax deduction is a deduction set by the IRS that allows you to reduce your taxable income if you cannot take advantage of more tax deductions by itemizing.
Standard deductions will help lower your taxes, but if you take a little time and gather up some of your receipts for additional money spent, you may be able to itemize your deductions to get a bigger tax refund.
Many think owning a home is the only way you can itemize your tax deductions, but even if you don’t own a home, or your mortgage interest is low, there may be other deductions that help you itemize.
Itemized deductions include:
Read on for the tax deductions you need to know.
Don’t forget that if you paid for medical and dental care for you, your spouse and your dependents to diagnose, cure, mitigate, treat or prevent disease, you may be able to deduct those medical expenses that are more than 10% of your adjusted gross income. So if your AGI is $50,000, you can deduct medical expenses that exceed $5,000.
One of the biggest boosts to your tax refund is the mortgage interest you pay. If you have a home loan and pay mortgage interest, you can deduct home mortgage interest based on a secured loan up to $750,000. That’s if the loan was taken out after Dec. 15, 2017. Home mortgage interest based on a secured loan up to $1 million is available for loans secured before Dec. 15, 2017.
Points are charges paid to obtain your home mortgage and are considered prepaid interest. You can increase the amount of interest you deduct by including the points (loan origination fees) paid to purchase or build your home. If you refinanced your existing home loan, you can still deduct the points paid. However, the points paid have to be divided over the term of the home loan.
You may not realize state and local income taxes withheld from your wages are deductible, as well as any prior year’s state and local income taxes paid during the year, but you have to itemize to reap the benefits of this deduction. Also keep in mind that the deduction for state and local income or sales tax and property taxes is now capped at $10,000.
If you are charged personal property taxes based on the value of your car or boat, don’t forget you may be able to include this tax deduction.
If you did spring or fall cleaning, don’t forget to deduct the fair market value of clothing and household items you donated to your favorite charity. Did you do volunteer work? You may also be able to deduct your mileage and travel expenses directly related to volunteering.
No one can replace personal items lost in a natural disaster, but the IRS offers some tax relief for victims of natural disasters. If you experienced damage or destruction due to a federally declared disaster, you may be able to deduct your loss if it is greater than 10 percent of your income and $100.
You may not have thought about gambling losses when you won at the casino or while playing fantasy football, but you can claim your gambling losses such as your wagers up to your winnings if you itemize your deductions.
These tips will help you organize your receipts for expenses you paid, so you can maximize your tax deductions.