List of tax deductibles

March 9, 2009 · Filed Under Tax · Comment 

We all should have enough knowledge about filling out the tax return for the minimum amount of legally required taxes. To understand this, we should have fair knowledge about tax credits and deductions. Tax credits are more valuable because they directly reduce taxes. When a tax deduction is applied, the amount of income gets reduced on which you are taxed. For example, 20% tax on an income of $100,000 means that you will have to pay tax of $20,000. A tax credit of $10,000 is subtracted from the taxes owed and results in a $10,000 tax. A tax deduction reduces the income to $90,000 and results in a tax of $18,000 (20% of $90,000). Hence the best way is to keep a listing of tax deductibles during the year using a 12 month expense worksheet.


Tax credits: Tax credits are often helpful to the small number of tax filers. Many people use three tax credits.

Child care tax credits: This is available to anyone who pays someone else to take care of their child under the age of 13. Your list of tax deductibles must include the name and social security number of your care provider. If you do not provide this information, your child care credit will be denied.

Dependant child credit: This is available to anyone having a dependant less than 17 years of age. This credit is phased out for high income filers, and people with high adjusted gross income.

Tuition tax credits: This is of two types, the Hope Scholarship and Lifetime learning Credits. This is not available to High income filers.

  • Tax deductions

Tax payers can choose to take their standard deduction or to itemize their deductions. You should keep a list of the tax deductibles. If the total number of deductibles is greater than the standard deduction, you should itemize your deductions on Form 1040, Schedule A.  Some of the tax deductibles include:

1) Charitable Contributions: You can consider charitable contributions to qualified organizations as a tax deduction.

2) Medical/ Dental Expenses: You can deduct medical and dental expenses for yourself, spouse and dependents that exceed 7.5% of your adjusted gross income.

3) Business Expenses: There are a number of business expenses including Business Use of Home, Business Use of Car, Business Travel Expenses, Business Entertainment Expenses, Educational Expenses, and Employee Business Expenses that are itemized deductions. Therefore, keeping track of your business tax deductibles is critical. Employees can only claim business use of their personal property if the use is for the convenience of their employer and it is required as a condition of employment.

4) IRA: Contributions to an IRA can lead to increased retirement savings.

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