With the April 15th tax deadline around the corner, taxpayers may be rushing at the last minute to prepare their taxes. In their haste, filers often take the easy way out and opt for the standard tax deduction instead of maximizing itemized deductions.
The standard tax deduction is a deduction set by the IRS that allows you to reduce your taxable income if you cannot take advantage of more tax deductions by itemizing.
The 2012 Standard Deduction Amounts are:
-- $5,950 if you are Single or MFS
-- $11,900 if you are MFJ
-- $8,700 Head of Household
Standard deductions will help lower your taxes, but if you take a little time and gather up some of your receipts for additional money spent, you may be able to itemize your deductions to get a bigger tax refund.
Many think owning a home is the only way you can itemize your tax deductions, but even if you don't own a home or your mortgage interest is low, there may be other deductions that help you itemize.
Here are 8 tax deductions you need to know:
1. Medical expenses. Don't forget that if you paid for medical and dental care for you, your spouse, and your dependents to diagnose, cure, mitigate, treat, or prevent disease, you may be able to deduct those expenses that are more than 7.5 percent of your adjusted gross income (AGI). So if your AGI is $50,000, you can deduct medical expenses that exceed $3,750. In 2013, the percentage will increase to 10 percent.
2. Points. Points are charges paid to obtain your home mortgage and are considered prepaid interest. You can increase the amount of interest you deduct by including the points (loan origination fees) paid to purchase or build your home. If you refinanced your existing home loan, you can still deduct the points paid. Howeve,r the points paid have to be divided over the term of the home loan.
3. Deductible taxes. You may not realize state and local income taxes withheld from your wages are deductible, as well as any prior year's state and local income taxes paid during the year--but you have to itemize to reap the benefits of this deduction.
4. Car or boat registration. If you are charged personal property taxes based on the value of your car or boat, don't forget to include this tax deduction.
5. Un-reimbursed employee business expenses. Un-reimbursed expenses such as travel, mileage, seminars, and publications directly related to your employment are tax deductible if they are more than 2 percent of your AGI.
6. Charitable contributions. If you did spring or fall cleaning, don't forget to deduct the fair market value of clothing and household items you donated to your favorite charity. Did you do volunteer work? You may also be able to deduct your mileage and travel expenses directly related to volunteering.
7. Casualty losses. Taxpayers suffered significantly in 2012. No one can replace personal items lost in a natural disaster, but the IRS offers some relief. If you experienced damage or destruction due to Hurricane Sandy or another sudden event, you may be able to deduct your loss if it is greater than 10 percent of your income and an $100.
8. Tax preparation fees. If you spent money to prepare your taxes--or used software to prepare them--you may be able to deduct your expenses paid for tax preparation.
These tips will help you organize your receipts for expenses you paid, so you can take advantage of itemized deductions instead of a lower standard deduction.
Lisa Greene-Lewis, Lead CPA, American Tax & Financial Center at TurboTax, has more than 15 years of experience in tax preparation, including positions as a public auditor, controller, and operations manager. For up-to-date tax tips and tax news, go to the TurboTax Blog.