Deductions are a big break during tax time that allow a person to reduce her taxable income based on certain expenses. The expenses you are allowed to claim are usually large ones. These deductions can greatly increase your tax refund. Deductions claimed must be equal to a fixed percentage of your income as specified by the Internal Revenue Service.
Stipulations
There are some stipulations that apply to making deductions on your tax return. Expenses you claim as deductions must meet 2 percent of your adjusted gross income (AGI) or 7.5 percent for medical and dental costs. These expenses can be deducted in amounts that exceed the percentage of the expenses claimed.
Medical/Dental Expenses
You may deduct medical or dental costs for yourself, your spouse or your dependents. Expenses must be already paid and not be paid for by insurance. Certain medical-related expenses are not covered, such as over-the-counter medications, cosmetic surgery and diet food. The costs claimed must be equal to or exceed 7.5 percent of your AGI.
Theft Loss
The value from loss of property that occurs because of theft is determined by using fair market value (FMV). There are deductions that will be subtracted from the FMV of the items lost. First, $500 will be deducted from the value of the items, then from the sum of that, 10 percent of your AGI is subtracted. The remaining figure is the amount you can use for the amount of the deduction.
Charitable Contributions
Donating items such as clothes, furniture, vehicles and other contributions to charity, qualify as tax deductions. You must have a receipt for the donation or other requested documentation depending on the amount your are claiming for the deduction. Deduction values are calculated by FMV of the goods donated.
Miscellaneous Deductions
Other deductions that qualify are job expenses, specified taxes such as vehicle sales or use tax and property taxes. Mortgage and business-related taxes can also be claimed as deductions. Moving expenses can qualify as a deduction if you moved to live closer to your job or business or for any other related qualifying reason. Student loan interest can be deducted up to $2,500 if you are at least a half-time student, are enrolled in a program that will result in a recognized credential, and meet income requirements. Other qualified expenses beside student loan interest are costs for tuition, room and board and other educational costs.
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