![]() What’s important to know is you can add sales tax paid on larger purchases such as a car, boat, RV, etc., to the IRS calculator’s basic estimate. Since many don’t want to take the time to save and add up every receipt, it makes sense to use the calculator. To determine your deduction, you can either aggregate sales tax paid throughout the year, or you can you use an IRS calculator that provides estimates based on your income and zip code. When you buy things, your receipt reflects the sales tax you paid. Keep in mind that people who have businesses and/or investments that generate income in other states have to file a tax return in that state and pay tax there. ![]() Fourteen states also charge a local income tax that can be included in this amount. ![]() If you live in a state with an income tax, you can deduct these taxes paid on your federal tax return. Income tax or general sales taxįor income tax and general sale tax, you can deduct the greater of these two expenses, but not both. You may be able to deduct the following taxes up to the limit. Under the new tax reform, taxpayers are limited to $10,000 in deductions for state and local income, sales and property taxes. Payments for false teeth, reading or prescription eyeglasses or contacts, hearing aids, etc.It’s important to keep a log of all mileage driven for medical, charitable and business reasons. You can deduct $0.18 per mile you drive to and from places for medical reasons.Payments for admission and transportation to a medical conference relating to a chronic disease that you, your spouse or your dependents have.Payments of fees to doctors, dentists, surgeons, chiropractors, etc.Here are a few more expenses you may be able to deduct. Remember, you can’t deduct any part of a premium paid for by an employer for a group long-term care policy. Insurance premiums for long-term care coverageĪmounts listed in the table below are per person, so if both spouses have coverage, they can both include premium expenses up to the allowable amount per their age. Any premium you already received a tax deduction for can’t be double-counted here. This includes all premium costs you paid for out of pocket, but not those you paid for pre-tax through your employer-provided plan. Insurance premiums paid for medical coverage Below is a list of the common deductions in this category. You’ll be surprised how quickly these expenses add up and become eligible to write off. So for tax year 2018, you can deduct any qualifying expenses greater than 7.5% of your AGI. Out-of-pocket medical and dental expenses are subject to a 7.5% AGI floor in tax years 20 and revert to 10% thereafter. For example, if your AGI is $100,000 and the threshold for medical expenses is 7.5%, then any qualifying expenses above $7,500 can be included and deducted. Your AGI is your total amount of income from all sources after subtracting certain deductions, such as alimony paid, HSA contributions, the deductible part of self-employment taxes, etc. Deductions fall into these categories:Ĭertain categories, including medical and dental expenses, casualty and theft losses, are subject to a floor that only permits you to deduct expenses above certain thresholds, such as 7.5% of your adjusted gross income (AGI – IRS Form 1040, line 38). This level of organization is necessary whether you work with a tax professional or prepare your own taxes. To keep track of these deductible expenses, it’s important to be organized and maintain a box or folder to store your receipts throughout the year. With the recent tax reform, it’s never been a better time to figure out what you can still itemize in 2018 and in future tax years. That isn’t the case at all, depending on your circumstances. With the doubling of the standard deduction and elimination or reduction of several itemized deductions, you might think there aren’t many opportunities left to itemize.
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