The best way to maximize deductions is to categorize them, according to TurboTax. Itemize deductions in IRS-approved categories to determine if they add up to more than the standard deduction.Continue Reading
Many everyday expenses can be itemized as deductions on a personal income tax return, which can save individuals a lot of money. Some people are better off taking the standard deduction, but if they have a large amount of qualifying expenses, they can itemize those expenses on their tax returns, states TurboTax.
Only expenses in IRS-approved categories are allowed to be deducted These include medical and dental expenses, deductible taxes, interest expenses, charitable contributions, and non-reimbursed employee business expenses. Expenses in certain categories must cross a few thresholds to be itemized. Medical and dental expenses can only be deducted if they exceed 10 percent of the adjusted gross income, and non-reimbursed employee expenses must exceed 2 percent of the adjusted gross income before they are deductible, explains TurboTax.
Individuals who intend to itemize should generate as much spending as possible in the approved categories in order to maximize the deductible. It's not recommended to spend just to generate a deduction, but it makes sense to make certain purchases during the same year the tax payer is considering itemizing deductions, advises TurboTax.Learn more about Taxes