Allowable tax deductions are ever changing
Filing taxes is one of life's most frustrating processes, and most people are unaware of what they can deduct from their annual income. The ever-changing tax laws make it even harder for the average person to keep up, which is why most people have their taxes filled out by professionals. If you choose to file your own return, you should be aware of some of the most commonly claimed deductions.
Charitable Donations
Donations a person makes to a qualified nonprofit organization represent an allowable tax deduction. A donation of less than $250 to one of these organizations does not require a receipt, but it's a good idea to have one. Any donation over the $250 threshold requires the individual to have a receipt from the nonprofit to substantiate the amount given. The receipt does not have to be provided with the tax return, but does need to be maintained in case the Internal Revenue Service (IRS) decides to audit that particular return.
Business Expenses
Any expense for which an individual's employer does not provide reimbursement is an allowable deduction. This may include travel expenses such as gas, airline tickets or lodging. The expense of entertaining prospective clients is also allowable within certain limits. This can include business meals, sports and theater tickets or anything a person utilizes to legitimately entertain the client. If an audit is required, the taxpayer will have to prove to the IRS that the entertainment expenses were directly related to business.
If the employer requires the individual to dress a certain way or wear a uniform, the employee is allowed to deduct the expense of maintaining this requirement.
Home Office
Having a business office in the home is a prominent tax deduction utilized by many people. If a portion of your home is used as a home office for your primary employment, or if you run your business out of your home, a portion of the cost of maintaining the home is an allowable deduction. The catch is that the part of the home in question cannot be utilized for both living and business purposes-- only for business. This will require the taxpayer to determine what percentage of the home is used for business purposes. Allowable deductions in this case include the appropriate portions of real estate taxes, maintenance and repairs to the home that year, homeowner's insurance and utilities.
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