If you’re getting ready to file your tax return, make sure you’ve claimed all the deductions that you’re due. Most Americans know they can deduct items such as charitable donations, mortgage interest, and property taxes, but there is a long list of other deductions that fall into the “miscellaneous” category. Taxpayers who miss these deductions lose the opportunity to make significant reductions in their tax bill, according to the Pennsylvania Institute of Certified Public Accountants. Here’s an overview.
Calculating your AGI
To claim some deductions, specific expenses must add up to more than 2 percent of your adjusted gross income. To determine if those expenses qualify, add up your total income for the year, then subtract the adjustments to your income, also known as “above the line” deductions. Adjustments typically include deductions for educator expenses, moving expenses, student loan interest and tuition payments, alimony payments, IRA contributions, among others. Let’s say that your AGI adds up to $50,000. Two percent of $50,000 is $1,000. So, after you subtract $1,000 from the total amount of certain miscellaneous expenses, you can deduct the rest. You can refer to your prior year federal income tax return to get a quick estimate of your current year AGI.
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