Common itemized deductions include medical and dental expenses, state and local taxes, mortgage interest, charitable contributions, unreimbursed job expenses, and certain miscellaneous deductions like investment expenses or casualty losses. Filers who take the standard deduction can file Form 1040.
These may include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent. Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited.
$300 maximum claims rule
This rule states that if the total of your work-related expenses is $300 or less (not including car, travel, and overtime meal expenses, which can be claimed separately), you can claim the total amount as a tax deduction without receipts.
How much can you claim on these items? It's important to keep in mind that if your laundry claim is over $150 total, or your total claim for work-related expenses is greater than $300, then you'll need to provide written evidence, like diary entries or receipts.
Work clothes are tax deductible if your employer requires you to wear them everyday but they cannot be worn as everyday wear, such as a uniform. However, if your employer requires you to wear suits – which can be worn as everyday wear – you cannot deduct their cost even if you never wear the suits outside of work.
Credit card fees are not deductible for individuals and are deductible for businesses. Businesses can deduct all credit card fees as well as finance charges. Businesses are eligible to deduct credit or debit card processing fees associated with paying taxes, but individuals are not.
Tax-deductible furniture for an individual office includes desks, chairs, computers and accessories, phones, shelving and decor.
You can write off a percentage of your electricity bill that is equal to the percentage of space that your office occupies in your home. For example, if your home office occupies 20% of the space (square footage) in your home, then 20% of your electricity bill can be used as a tax deduction.
Calculating Your Internet Deduction. Internet expenses associated with your home office are deductible on the “Utilities” line of Form 8829. Expenses associated with an office in the home either are considered a direct expense or an indirect expense.
Itemized deductions, subject to certain dollar limitations, include amounts you paid, during the taxable year, for state and local income or sales taxes, real property taxes, personal property taxes, mortgage interest, disaster losses, gifts to charities, and medical and dental expenses.
Though personal loans are not tax-deductible, other types of loans are. Interest paid on mortgages, student loans, and business loans often can be deducted from your annual taxes, effectively reducing your taxable income for the year. You shouldn't need a tax break to afford a personal loan.
Different businesses may have different factors that could justify the deductibility of these fees. Tax deductible bank fees include service charges and monthly maintenance fees. However, overdraft fees fall into a different category and may not be eligible for tax deductions.
Key takeaways. Credit card interest is not tax-deductible for personal expenses. The government stopped allowing a tax deduction for credit card interest in the 1980s. Interest on student loans, mortgages, home equity loans, and business expenses are still tax-deductible.
Married filing jointly is the most common filing status for married couples. This status has the highest standard deduction and some of the most beneficial tax rate brackets. You file together and report combined income, along with your combined deductions and qualifying credits on the same return.
Simple Summary. Every year, your refund is calculated as the amount withheld for federal income tax, minus your total federal income tax for the year.
If your total claim for work-related expenses is more than $300, you must have written evidence for all of your work-related expenses. However, you can claim for laundry expenses up to $150 without written evidence. This doesn't increase the $300 work-related expenses limit to $450 – see, Record keeping exceptions.
The general rule is that personal grooming expenses, including haircuts, are not deductible.
Classifying gas expenses
Vehicle expenses: If gas is used for company vehicles involved in daily operations, list it under vehicle expenses. Travel expenses: Gas used for business travel, like driving to client meetings or conferences, falls under travel expenses.