Questions About Taking Deductions Off Income Taxes
- Tax professoinals can offer help with all your deduction questions.TAX TIME image by brelsbil from Fotolia.com
Come tax time, it's not unusual for the phones at tax preparation offices to ring consistently. This is the time when people realize that they aren't sure about a tax issue and want to ask questions. Many of the questions people ask involve tax deductions. Although individual circumstances make it impossible to list all of the deduction questions one might pose, a few questions reoccur with fairly predictable frequency. - People often want to know whether they can take out more than one deduction on a return. The obvious answer in most cases is yes. For example, if you are a homeowner who is also paying back school loans, you may qualify for deductions on both the interest on your mortgage and the school loans. However, some deductions exclude you from taking other deductions. For example, according to Money-zine, you can deduct either your state and local general sales tax or your state and local income tax, but not both. Thus, you aren't limited to a particular number of deductions, but you may need to choose which deductions are best for you.
- With divorce and remarriage increasingly common, more people have questions about claiming dependents on their returns. The golden rule about dependents is that any dependent, minor or adult, may be claimed only on one return. The IRS uses the Social Security number of any dependents you claim to make sure that the dependent wasn't double-counted. Thus, if you claim a dependent, no one else should and vice versa. Roberge & Company clarify this even further by stating that a dependent 1) must be unmarried, 2) must have U.S. citizenship or legal alien status, and 3) must be a child or relative.
- With half of marriages ending in divorce according to the Center for Disease Control, many taxpayers have to pay alimony to a spouse. You have the right to deduct alimony payments on your tax return because, even though your ex might not be a child or single, you're still essentially supporting your ex as if your ex were a dependent. According to H&R Block and The Finance Buff, the IRS considers alimony an "above-the-line" deduction, meaning that the amount you claim for deduction appears above the adjusted gross income on your 1040 and is an adjustment to your taxable income.
- With college degrees required for many professions, education deduction questions are common. In general, there are two education deductions you may take. You can deduct up to $2,500 in interest on student loans, and you also can deduct up to $4,000 in tuition and fees, according to H&R Block.
- People sometimes wonder whether they can write off items they give to charity. As long as the item isn't cash, you typically can deduct it. It's best to get a receipt for the donation so you can verify the value of the donation if needed.