Among the deductions that the Internal Revenue Service (IRS) is offering to individual taxpayers include deductible business expenses for work-related deductions, individual retirement account (IRA) payments for deductions on investments and student loan interest payments on education deductions. The amount of all the deductibles should be totaled and then subtracted from a taxpayer's income before his income tax is calculated, notes the IRS website.
There are two basic types of tax deductions and these are standard deduction and itemized deduction. Standard deduction is the set amount of maximum deduction that the IRS allows a taxpayer to subtract from his income.
As its name implies, itemized deduction itemizes all the deductible items, which presents an opportunity for the tax payer to get a higher deduction than the IRS allows for standard deductions. It should be noted, however, that there are rules and qualifications for each deductible items, states the Money Instructor website.
The following are deductions for individuals as stated on the IRS website.
- Work related
- Health care
- Itemized deductions
- Miscellaneous deductions
Deductible business expenses, standard mileage rates, home office, business use of car, business travel expenses, bad debt, business entertainment expenses and depreciation and amortization.
Sale of home, IRA and capital losses.
Student loan interest, tuition and fees deduction, work-related educational expenses and teacher's educational expenses.
Medical and dental expenses and health savings account.
Deductible taxes, property tax, real estate tax, sales tax, charitable contributions, gambling loss, miscellaneous expenses, interest expense, home mortgage expense, union/club expense and moving expenses.
Alimony paid and casualty, disaster and theft losses.