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Our Guide to the Most Common Tax Deductions

Carefully-implemented income tax deductions offer taxpayers many creative ways to shave dollars off their taxable income totals. However, there are many rules for claiming deductions, and this makes it easier to commit costly mistakes.

This section:

  • Lists all of the commonly claimed tax deductions (see below)

  • Describes how each tax deduction works

  • Explains how easy it is to claim deductions when you e-file

Claiming Deductions Made Simple:

If you want to avoid costly mistakes, while at the same time taking advantage of all credits and deductions, you'll want to do your taxes with TurboTax this year.

TurboTax helps you work quickly and easily, and it double-checks your return to help you get the largest possible refund. You can even file your state taxes at the same time, and get your state refund (which may be substantial) much faster than if you mail a paper return.

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The Most Common Types of Tax Deductions:

Mortgage interest tax deduction the most commonly claimed deduction. Includes articles on deducting mortgage points and the tax effects of refinancing.

Student loan interest deduction allows the deduction of up to $2500 in interest. (This deduction is an adjustment to income meaning you don't have to itemize!)

Medical expenses tax deduction allows the deduction of expenses over 10% of A.G.I. (7.5% if you were born before 1949).

Charity & gifts tax deduction allows the deduction of money and goods donated to qualified organizations.

Investment interest deduction lets you deduct margin interest.

Tuition and fees tax deduction is ideal for those who cannot claim any tax credits for education but have qualifying tuition expenses.

Casualty & theft deduction helps defray certain losses.

Taxes paid deduction allows the deduction of certain local taxes paid the same year.

Miscellaneous tax deductions deductions that do not fit into any of the above six categories.

Most often when you think of "writing something off" on your taxes, you are in fact thinking of something that would fall into the miscellaneous tax deductions category.

Some Basic Facts to Consider

By itemizing your deductions, you may find that you'll save much more money than you would by just taking the standard deduction.

But beware: itemizing deductions can be tricky, and can leave you open to making the sort of mistakes that lead to penalties, or worse, trigger the dreaded audit.

Well, okay, it's not quite that dire. But itemizing does add an extra level of complication to your tax return - so proceed with caution. Read our expanded guide to itemizing tax deductions to learn more.

And finally, we also explain the dreaded Alternative Minimum Tax, also known as the AMT which kicks in in certain situations when too many deductions are claimed.

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