Making the most of your tax deductions

making the most of your deductionsIt’s April and once again tax time is upon us. As a tax payer, you are allowed two options for deductions; standard or itemized. Interested tax payers will compare each method to see which one is more advantageous. Some tax programs like Taxcut and TurboTax® make the comparison for you and suggest the best outcome.

The standard deduction for 2013 is $12,200 for married filing jointly and $6,100 for  filing single. Taking the standard deduction requires no proof of expenses, no itemization and no home ownership requirement.

You can include these items below on your Schedule A as itemized deductions:

  • Specific taxes in which you paid for state and local income tax, real estate property taxes, general sales tax, personal property taxes or other taxes paid
  • Qualifying home mortgage loan interest, interest on investments and quite possibly, your mortgage insurance premiums (PMI)
  • Contributions to charity organizations, must meet IRS guidelines for a charity
  • Losses due to theft or casualty (i.e., fire, hurricanes, earthquakes etc.)
  • Dental and medical treatment expenses that exceed 7.5 percent of your adjusted gross income if you were born before 1/2/49 or 10 percent if you were born after 1/2/49
  • Expenses related to your job and other qualifying miscellaneous deductions that exceed 2 percent of your adjusted gross income (AGI)

If you don’t own a home and are taking just the standard deduction, think about the benefits you are missing by not being able to deduct your mortgage loan interest and paid property taxes. These amounts will vary based on interest payments made during the year and your property tax bill.

Contact me if you are interested in buying a Fairfax home for sale and capitalizing on these deductions on your yearly tax savings. When adding up itemized deductions for your home, plus extras like charity and the ones I mentioned above.  Now it sounds like a great idea  to purchase a home.