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Three Common Deductions that Taxpayers Often Miss
By Darrin Mish
Every year, there are many tax deductions that many people do not take simply because they have no clue that they exist. Often they only learn about a deduction that they could have taken days after they filed their taxes while in the middle of a conversation with a co-worker or a friend. It's completely understandable that most people do not know about too many of the deductions that they can legally claim. In the same way that there are too many tax laws to take note, there are nearly as many different types of deductions that we can take. Sadly for some reason, the outrageous ones that people claim, like deducting donated body parts, are not legally accepted by the IRS. Here are three of the deductions that are easiest to benefit from. First, make sure you reflect in your tax return any donation, aside from cash, given to a charitable organization. This includes those items that were paid using your credit card. Be careful of the fact, however, that the deduction should be claimed on the same year the donation was made, and not when the bill was fully paid. You must also secure from the non-profit organization a written receipt of the donations that you have given to them. For charged transactions, you can also ask your credit card provider to give you the necessary record. Be aware though that this type of deduction also covers actual items donated. Hence, if you decide to simply donate old furniture and used clothes, go ahead as these too, are tax deductible, to a particular degree. Just do not forget to get proof of the donation so you will have no problems in supporting your claim and claiming for the necessary deduction. Also, make sure that items donated are in good condition or the IRS will not consider this move as something that will merit a tax deduction. You may also deduct a certain portion of the new points earned as a result of refinancing your home. If on June 1st you have refinanced your home for a 20-year term, you can actually claim for deductions equivalent to 7 (June 1 - December 31) of the 240 months. A deduction equal to $70, or $10 for each of the 7 months, can be taken if the new points require you to pay $2,400 for the 20-year term. In the same way, until the $2,400 will be fully paid, you can deduct $20 per annum within the 20-year term. This type of deduction is often overlooked by people simply because of the specific requirements that need to be met. As soon as you meet certain requirements, you can actually deduct your health insurance premiums from your total taxable income. Yes, rather than paying for them, you may deduct health insurance premiums depending on how old you are. This stipulation even applies to premiums related to long-term care. The trick is that you must add these to your total account of medical expenses. Also, before you will be able to claim this tax benefit, the total must be more than 7.5% of your AGI or adjusted gross income.
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