Filing Income Taxes - Tax Deduction Checklist

Have you heard that more than 50% of taxpayers who file tax returns have to pay more tax than they are required to pay? It's hard to believe isn't it? I'm not suggesting you complete your own tax return, however, you should just be aware of the details of your own particular situation that you can be able to save money.

Tax deductions are among the main ways you can lower your tax burden. There are a myriad of tax deductions, but they are not applicable to all people. Tax deductions can provide the tax benefits for certain people under certain situations.

For instance, you can take home mortgage interest deductions or medical and dental costs when certain conditions are met.

The first thing you should do to learn about tax deductions is read some tax forms, whether or not. This may sound strange, but taking the time to read the tax questions on tax forms can help you determine what kind of items can be claimed.

Begin with IRS Form 1040. Everyone who files tax returns must submit this form. Check out the section titled "Adjusted Gross Income". In this section , you will find 10-12 different deductions. Certain deductions may be applicable to you.

The second page of this form is the part titled "Tax and Credits". In this section, you should include any credits that could be applicable to you. It is not an income deduction but rather a tax credit due. (Even better than the deduction.)

For instance, if you invested $1,000 in education, you could be able to write it on a variety of lines of the tax form. On line 34 on the 1040 tax form, you could include the cost of education as deductions. In this scenario, your taxable income would be lower by $1,000. (This will reduce your tax bill by $150-$350 based the tax bracket you are in.)

You may also be able to use that $1,000 line 49 for tax credit. In this scenario, you'd be liable for tax payments of $1,000 less. Naturally it is the most efficient option. You might not have realized this if you hadn't looked over the form for tax purposes.

The next form to use to claim taxes is Schedule A for deductions that are itemized. Check out all the sections on this form so that you will be able to determine which deductions be applicable to you. When you've reviewed these questions you'll be able to determine if it is best to opt for your deductions under the "Standard Deductions" instead. It is basically a simple amount that is applicable to all but you might have other deductions and use this schedule, which is an itemized deductions form.

The Tax Deductions For Dependents you should look through can be found on that of the Schedule C form. Even if you don't have a real business, but you earn additional earnings that you need to declare, you can use this form.

Check out the section 2. (Expenses) of the form. Examine if you've got any of the following items that could be relevant in relation to earning extra income. Imagine you earned $2,000 more income. If you didn't put that amount in Schedule C than you would be required to pay tax on the total $2,000. If you spent $1,000 on expenses, then you should list your expenses on the schedule C and are taxed less.