If you itemize your taxes, you can deduct your mortgage interest; state and local taxes; charitable donations; and medical expenses that exceed 10 percent of your adjusted gross income, explains TurboTax. If you claim the standard deduction, you deduct a set figure determined by the Internal Revenue Service.Continue Reading
Tax payers may also deduct smaller items such as union dues, work clothing, business liability insurance premiums and job training costs, but these items can only be deducted if they exceed 2 percent of the tax filer's adjusted gross income. Only the amount that exceeds that percentage can be deducted, according to Bankrate. Therefore, if your adjusted gross income is $40,000, 2 percent of that amount is $800. If your miscellaneous expenses equal $900, you can deduct $100.
To determine if you should claim the standard deduction or itemize your deductions, add up the value of your itemized deductions and compare that total to the standard deduction for the year. The highest number represents the most advantageous deduction, according to TurboTax. The standard deduction changes annually, but as of 2013, the standard deduction is $6,100 for a single person, $12,200 for a married couple or $8,950 for a head of household, reports H&R Block.Learn more about Taxes