Guide to Filing Taxes Using Itemized Deductions

itemized deductions

April is here and that means taxes are due soon. If you still need to file your return, don’t worry; you may be able to use this extra time to go over your finances and decide if itemizing your deductions this year will be a better deal. It could be the difference between owing Uncle Sam and getting a little refund from him.

Should You Itemize Your Deductions?

Basically, when you decide whether or not to itemize deductions, you’re gauging whether doing so would allow you to reduce your taxable income by more than taking the standard deduction would. For those filing 2011 taxes, the current standard deductions are:

Single: $5,800
Married (filing separately): $5,800
Married (filing jointly): $11,600
Qualifying Widow(er) with Dependent Child: $11,600
Head of Household: $8,500

If you were born before 1947 or you’re blind, please check with the IRS for your deductions table.

When we were filing our tax return this year, we found out that it was better for us to itemize our deductions. It was a small difference, but we got a slightly bigger refund for it. That money was used to top off the car fund and to pay down the student loan — both big goals for us this year.

Finding Tax Deductible Items

If you have an eagle eye, you can identify all the deductions you may qualify for yourself, or go with other options like using tax preparation software, a tax preparation office, or even an independent CPA to provide you another pair of eyes and make sure you don’t miss a deduction.

What kind of deductions should you look out for? Here are a couple of big deductions you may be able to claim:

Mortgage Interest Deduction: If you have a mortgage and you pay interest on it, then go ahead and use this deduction.
Casualty Loss Deduction: If you had been hit by a disaster last year, check to see if you can take a casualty loss deduction.
Medical Expenses: If you’re medical expenses exceeded 7.5 percent of your adjusted gross income, you may be able to deduct them on your taxes.
Job Hunting Costs: You may be able to qualify for a job search tax deduction. In this economy, it may be a bit of a boost to a bad situation.
Student Loans: Did you know you may be able to deduct the interest you paid on student loans? Check with the IRS to see if you can take this deduction.
Home Office Expenses: Depending on how you run your business, you may be able to deduct your business expenses.

It doesn’t hurt to double check the available deductions to see if you’re missing anything. That said, don ‘t try to get “creative” with your tax deductions. You don’t want to risk an audit. Instead, focus on what you can take and plan ahead for next year’s taxes.

Now let’s talk about you and your taxes. How are you doing with your taxes this year? How many of you are itemizing your deductions? How many of you will take the standard deduction?