Every taxpayer has a choice when it comes to filing their forms: they can either take a standard deduction, or choose to itemize. The standard option offers a set deduction based purely on your filing status. It is one level for a single person, one for married couples filing jointly, etc. There is nothing more needed to qualify for it; you are automatically eligible and receive it by default unless you specifically choose not to. For many people, that is the best choice. But for others, listing specific write-offs through itemizing yields bigger returns, provided you have the documentation and other supporting material to ensure that your forms are complete.
What Can Be Claimed?
There are a number of different items which can be claimed on your forms. The general categories are: medical expenses, charity, losses, employment spending, tax return service fees, and legal fees. All of these can be claimed to various extents, although the exact numbers will vary from item to item.
When most people think of writeoffs, charity is the first thing that comes to mind. It is true that donations can be deducted, but unless you make a substantial contribution it's unlikely that you'll want to select this rather than the standard. Even for a single individual, standard is usually more than a $2,000 writeoff. Unless you donate more than that, you'll want to hold off.
Start By Gathering Your Records
Having physical proof of everything that you claim is vital. The government is known for cracking down on anything suspect in itemization precisely because it can be so easily manipulated. Make sure that everything you write down can be substantiated. If you donate, ensure that you receive a receipt from the organization itself. Make sure that they write down everything and assign it a value. If possible, get it signed by an official.
If you're donating more than $500 worth of items, or a big-ticket item like a vehicle, make sure that the agency provides you with the appropriate forms. For a vehicle, you'll need the special 1098-C form, which covers that specific type of contribution. For anything more than $500, you'll need to complete Section A of form 8283, and for anything over $5,000 you'll need to complete a professional appraisal to certify the value and present Section B of form 8283.
Know The Limits
There are limits to almost every category. Make sure that you are aware of any minimum or maximum thresholds that apply to your selected writeoff. For example, medical writeoffs cannot be claimed unless the expenses exceeded 7.5% of your adjusted gross income. Transportation, tax return service charges, and legal expenses may be claimed only if they exceeded 2% of your AGI.
Having your information ready is half the battle with itemization. If you do plan to itemize, make sure that you have a professional complete your forms. In addition, select someone local. If you live in Philadelphia, prepare your tax in Philadelphia. Local restrictions rarely impact these types of deductions, but it's always better to go with a local professional just in case.
What Can Be Claimed?
There are a number of different items which can be claimed on your forms. The general categories are: medical expenses, charity, losses, employment spending, tax return service fees, and legal fees. All of these can be claimed to various extents, although the exact numbers will vary from item to item.
When most people think of writeoffs, charity is the first thing that comes to mind. It is true that donations can be deducted, but unless you make a substantial contribution it's unlikely that you'll want to select this rather than the standard. Even for a single individual, standard is usually more than a $2,000 writeoff. Unless you donate more than that, you'll want to hold off.
Start By Gathering Your Records
Having physical proof of everything that you claim is vital. The government is known for cracking down on anything suspect in itemization precisely because it can be so easily manipulated. Make sure that everything you write down can be substantiated. If you donate, ensure that you receive a receipt from the organization itself. Make sure that they write down everything and assign it a value. If possible, get it signed by an official.
If you're donating more than $500 worth of items, or a big-ticket item like a vehicle, make sure that the agency provides you with the appropriate forms. For a vehicle, you'll need the special 1098-C form, which covers that specific type of contribution. For anything more than $500, you'll need to complete Section A of form 8283, and for anything over $5,000 you'll need to complete a professional appraisal to certify the value and present Section B of form 8283.
Know The Limits
There are limits to almost every category. Make sure that you are aware of any minimum or maximum thresholds that apply to your selected writeoff. For example, medical writeoffs cannot be claimed unless the expenses exceeded 7.5% of your adjusted gross income. Transportation, tax return service charges, and legal expenses may be claimed only if they exceeded 2% of your AGI.
Having your information ready is half the battle with itemization. If you do plan to itemize, make sure that you have a professional complete your forms. In addition, select someone local. If you live in Philadelphia, prepare your tax in Philadelphia. Local restrictions rarely impact these types of deductions, but it's always better to go with a local professional just in case.
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