September 9, 2019
5 Most Common Itemized Deductions You Can Take Advantage Of
If you’re an American taxpayer, there are five most common itemized deductions that won’t come as a surprise to you. Citizens are allowed to deduct a certain amount from their taxes every year to reduce their tax bills. This is to ensure that at least a part of the taxpayer’s income won’t be subjected to federal income taxation.
When you claim for a tax deduction, you can either choose to claim the standard deduction or the itemized deduction. A standard deduction refers to the fixed amount that is based on your filing status. Itemized deductions, on the other hand, are various types of expenses that a taxpayer can claim to decrease their taxable income.
Itemized deductions are more flexible than standard deductions. When you add up all of your allowable deductible expenses, it can result in an amount that is higher than the standard deduction. The best thing about itemized deductions is that when you suffer losses, the Internal Revenue Service (IRS) won’t require you to pay the income tax due you for that specific year.
What are the 5 Most Common Itemized Deductions?
Itemized deductions could significantly reduce the amount of taxes we have to pay. The IRS has established a list of allowable itemized deductions that American income earners can claim to lower their tax bills. Veteran Car Donations shares the 5 most common itemized deductions you can claim:
- Mortgage Interest
If you’re a homeowner, the interest you pay on the mortgage can qualify as an itemized deduction. It could be a significant amount depending on where you are on your mortgage term at the moment. In addition, you can also include premium mortgage payments on your itemized deductions.
- City or Property Tax
Most of the states collect their own income tax. You can use this to your advantage when you choose to itemize your deductions instead of claiming the standard deduction in your federal income tax return. You may be able to claim the state or city taxes paid within that taxable year. You can also add your property taxes to the list of itemized deductions you can claim.
- Medical Expenses
You can include in your tax deductions any medical or dental expenses you paid that came out of your own pockets. However, the amount you can deduct in only 10% of your adjusted gross income (AGI). For instance, if your AGI is $50,000 you can only claim a deduction not exceeding $5,000 (10% of the AGI).
- Casualty and Theft Losses
Casualty and theft losses are defined as loss or destruction of personal property due to an unforeseen event. Losses due to theft usually require proof before they can be qualified as tax deductibles.
- Charitable Gifts
The needy aren’t the only ones who can benefit from your charitable gifts. You’ll get to reap meaningful returns for your generosity as well. When you make a donation to an IRS-certified 501 (c)3 nonprofit organization, you will be eligible for a tax deduction.
All these can only be of benefit to you when you choose to itemize your tax deductions. However, for you to benefit from itemized deductions, the total amount of your itemized deductions should be greater than the amount that you can claim under the standard deduction.
Help Our Heroes by Donating a Vehicle!
When you think about what you can do to reduce your tax bill, consider including vehicle donations as one of your options. Donating to a reputable charity will benefit not just you but also the needy people being served by your chosen charity or nonprofit organization.
If you donate a vehicle to us at Veteran Car Donations, we will sell it via auction and use the proceeds to support the programs of our charity partners. These IRS-approved 501(c)(3) nonprofit organizations provide homeless veterans and those with service-connected disabilities with mortgage-free and specially adapted homes. Those suffering from Post-Traumatic Stress Disorder and other mental issues are provided with free mental health care while those seeking jobs are given employment opportunities and job training. Other underprivileged veterans get to receive transitioning assistance, tutoring support, education scholarships, financial assistance, and many other benefits.
In return for your vehicle donation, we’ll send you a 100% tax-deductible receipt that will entitle you to claim the maximum tax deduction based on the selling price of your donated vehicle at auction or its fair market value. This can significantly lower your tax bill when you file your itemized federal income tax return in the next tax-filing season.
You can donate to Veteran Car Donations by filling out our secure online donation form or calling us directly. We accept donations of nearly all types of vehicles wherever you are in the United States since we have car donation programs in all 50 states.
Enjoy a Tax Deduction and Help Our Needy Veterans
Now that you have an idea about how itemized deductions work, nothing can stop you now from donating that clunker for the good of the veterans who risked their lives for our country. Call us at 877-594-5822 and transform your old vehicle into a life-changing tool for our nation’s heroes.