Few people enjoy paying taxes, and fewer still want to pay more in taxes than they actually owe. Yet that is exactly what many people end up doing each year when they fail to claim all of the tax deductions they are entitled to and are expected to take advantage of.
People and businesses often miss these tax deductions because they do not even realize the deductions exist. The U.S. Tax Code is notoriously long and complex, and there is no centralized listing of all the available deductions and tax credits. To rectify this, we have endeavored to create such a list.
Tax regulations are constantly changing, and for brevity’s sake, there are many specific details that we cannot list here. However, this list is a good starting place to help you identify what you should be able to deduct. You can contact our tax preparation professionals to determine how to utilize such deductions.
*Please note that the deductions listed below are available at time of writing, but individual and businesses deductions may change from year to year. Be sure to check the IRS website before claiming any deductions on your return.*
Individuals can deduct many expenses from their personal income taxes. Below is a list of deductible expenses, organized by category.
You can deduct most expenses relating to medical or dental diagnosis, treatment or prevention as long as those expenses are in excess of 7.5 percent of your adjusted gross income (AGI). You can deduct the expenses for any of the following procedures, services or health-related items:
With just a few exceptions, you usually can deduct all of the cost of borrowing money to own a home (or homes). This includes:
You can usually claim an educational deduction if you or your dependents attend an accredited institution of higher learning. People with higher incomes may not be allowed to deduct as much (or claim the deduction at all). For those who qualify, the deductions include:
You can also deduct what you spend on work-related education, as long as that education is required for you to keep your current job or it contributes to the skills you need to perform your current job. Such work-related educational expenses include:
With some limits, you can deduct any contributions to qualified charities or tax-exempt organizations. The following count as deductible contributions:
If you use your home or car for business purposes, you may be able to deduct some of your living expenses. There are restrictions, but if you use part of your home exclusively as a work office, storage space, or place of business, you can deduct a percentage of your:
Likewise, if you use your car for business purposes, you can deduct the cost of driving those miles. Commuting between your home and work is not deductible, but driving to meet clients or to get from one work site to another is deductible. In such cases, you can deduct a portion of your:
You can deduct your expenses when traveling away from home for work or when entertaining a client or employee. As long as the expenses are ordinary to your line of work and are considered necessary, you can deduct:
You can deduct other out-of-pocket expenses that are required for your job, subject to the 2 percent limit. Such expenses include:
If you are looking for a new job within your current line of work, you can deduct job hunting expenses such as:
If you are a member of the U.S. Armed Forces, you can deduct military-related out-of-pocket expenses such as:
If you have property that is damaged, destroyed, or lost due to some calamity or crime, and the loss is not covered by insurance, you can often deduct the value of the losses. There are limits to how much you can deduct, depending on the situation; these limits function similarly to an insurance deductible.
You can claim a tax deduction for property losses due to:
You can also deduct monetary losses due to inherent risk:
When paying federal income taxes, you can deduct taxes you have paid to other governmental entities (with limits). Deductible taxes include:
Various other expenses are deductible, including:
If you choose to not take any of the above deductions, you can claim a standard deduction amount set by the IRS. If your total itemized deductions add up to less than the standard deduction amount, you can save on your taxes by taking the standard deduction instead of listing any itemized deductions.
Businesses also pay income taxes and can also deduct expenses. All business expenses that are ordinary and necessary for doing business are deductible and reduce the amount of taxable income.
Depending on the type of business, there are multiple different expenses that might be included in the cost of goods sold:
You can deduct what you pay employees. Deductible forms of pay include:
You can deduct the insurance premiums for:
Interest or penalties paid on loans that are used for business purposes are usually tax-deductible, including:
Most business taxes can be deducted, including:
Capital expenses, such as the purchase of long-term assets, can generally not be deducted all at once. Instead, such expenses are deducted over a number of years through amortization, depreciation, or depletion. Capital expenses that can thus be deducted over time include:
Some long-term assets are intangible. Intangible assets have value that is included in the purchase price of any business you acquire. Intangible assets can also be amortized and deducted over time and may include:
As mentioned, all business expenses that are ordinary and necessary are tax-deductible. That makes the list of potential business tax deductions very lengthy. Companies are considered legal persons, so many of the personal tax deductions listed earlier can also apply to businesses. The listed personal business expenses, for instance, become business tax deductions if they are paid for by the company itself.
With so many different types of businesses, and so many different business activities, a fully detailed list of business tax deductions could fill volumes. Below is a general list of other business expenses that can be deducted; your tax preparation professional can help you make full use of the business deductions available.
There are many ways to lower your IRS bill if you know what to look for. However, the list of available tax deductions and credits, and the qualifications for each, are constantly changing.
At Top Tax Defenders, we know tax preparation is a year-round job. Whether you need help estimating your returns or are looking for answers to common IRS questions, we’re here to provide quick and accurate tax preparation services, from filings to consultations.
With over 27 years of experience working directly with the IRS, we have the industry knowledge and expertise to ensure you get the tax help you want, and the refunds you deserve. Let us put our proven methods to work for you. To make sure you receive all of the deductions and credits you deserve, contact the tax experts at Top Tax Defenders today.
Save all the information above in an easy-to-read format by downloading our free 18-page eBook that lists all the individual and business tax deductions you can claim. Fill out the form to the right to download the eBook and access this information anytime.