Itemizing Deductions and Expenses
Hold on to receipts for any tax-deductible expenses you generate throughout the year. Keep them together with your tax return, just in case the IRS needs to verify any of your deductions.
Keep receipts and forms for the following:
Contributions to retirement plans: The government will give you a tax break for contributing to a retirement account. Business owners or self-employed people can set up a Simplified Employee Pension (SEP). If you're not a business owner, you can set up a Roth IRA for the same purpose.
Charitable contributions: Not only will you do something good by contributing to a charity, but you'll lower your tax burden too. Cash donations, as well as donations of clothing, office equipment or items for a charity auction qualify as tax deductions.
Healthcare expenses: You can deduct medical and dental expenses, as well as healthcare insurance premiums, if they add up to more than 7.5 percent of your adjusted gross income.
Mileage: Every mile you drive for business, health, or charity counts as a deduction. You can deduct 50 cents per mile for business trips, as well as 16.5 cents per mile for medical or moving trips and $0.14 cents per mile for charity-related trips [source: IRS].
Real estate taxes: You can deduct state, local or foreign taxes paid on any property you own.
You can also deduct for:
- Home mortgage interest
- Points on refinancing your mortgage
- Your accountant's fees for preparing last year's taxes
- Unreimbursed job-related and job-search expenses (transportation, lodging, meals, classes, costs of printing resumes and business cards, etc.)
- Moving expenses
- Property loss due to casualty or theft
- Gambling losses
- Investment losses from previous years
- Dependent children
- Energy-saving home improvements
- Self-employment tax, home office expenses and health insurance premiums if you're self-employed
- Education expenses