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Federal Section > Deductions > Itemized vs Standard Deduction Comparison

This section shows you the total of your Itemized Deductions entered and compares it to your Standard Deduction. Unless you choose to force Itemized Deductions, we will automatically select the greater deduction .

Please explain deductions and credits that are available related to Education.

tuition and fees. For more information: Tax Benefits for Education Claiming Education Credits vs. Deductions How do I report qualifying education expenses that I paid with a 1099-Q distribution?

Please explain deductions that are available related to Medical Expenses.

Medical and dental expenses, such as doctor visits, health insurance, glasses, etc.: Generally, you are allowed a deduction for most of the medical expenses that you paid during the tax year. However, you cannot include any part of the expenses that were paid by an insurance company or other source. You can generally include the qualifying expenses that you paid for yourself, your spouse, and all dependents that are being claimed on your return. Common expenses include: * Medical and dental insurance * Amounts paid to doctors and dentists * Prescriptions * Medical aids such as eyeglasses, hearing aids, crutches, and wheelchairs * If you used your own car, you can even claim certain vehicle expenses that you paid to go to and from the place you received the care. For additional information, click here . Health Savings Account: A Health Savings Account (HSA) is a tax-exempt trust or custodial account that you can set up to help pay for medical expenses that you may incur throughout the year. Any contributions that you make to an HSA during the year are generally deductible. If you made contributions to an HSA, you should receive a Form 5498-SA listing your contribution information. You will know it is for an HSA because the HSA box will be checked in box 6. The IRS also requires that you report any distributions that you received from your HSA during the year. If you withdrew money from your HSA, you should receive a Form 1099-SA with the amount of your withdrawals. You will know it is for an HSA because the HSA box will be checked in box 5. Medical Savings Account: A Medical Savings Account (MSA) is another type of tax-exempt account that you can set up to help pay medical expenses that you may incur throughout the year. It is similar to an HSA. Any contributions that you make to an MSA during the year are generally deductible. If you made contributions to an MSA, you should receive a Form 5498-SA listing your contribution information. You will know it is for an MSA because the Archer MSA box or the MA MSA box will be checked in Box 6. The IRS also requires that you report any distributions that you received from your MSA during the year. If you withdrew money from your MSA, you should receive a Form 1099-SA with the amount of your withdrawals. You will know it is for an MSA because the Archer MSA box or the MA MSA box will be checked in box 5. Health Insurance for Self-Employed Individuals: If you were self-employed, you may be able to deduct any amounts that you paid to provide health insurance for yourself, your spouse, and/or your dependents. To qualify for the deduction: * Your business must have had a net profit for the year and * The insurance plan must be established under your business.

Please explain all of the credits and deductions that are available related to retirement and investment.

IRA Deductions Generally, any contributions that you (or your spouse, if applicable) made to a Traditional IRA qualify as a deduction on your return. Roth IRA contributions are not deductible. Sometimes this deduction may be limited

Please explain all of the deductions that are available related to my home.

Mortgage Interest Paid: Generally, any interest that you pay on a home mortgage can be deducted on your return as long as 1. The proceeds from the mortgage were used to buy, build, or improve your home AND 2. The loan is secured by your main home or second home. This includes interest for first mortgages and second mortgages, home equity loans, and refinanced mortgages. Generally, your lender will send you a Form 1098 with an amount in Box 1 listing the amount of mortgage interest that you paid. A home can be a house, condominium, cooperative, mobile home, boat, or similar property. It must provide basic living accommodations including sleeping space, toilet, and cooking facilities. Real Estate Taxes: You are allowed to deduct any real estate taxes (commonly called property taxes) that you paid on real estate that you own and did not use for business. This also includes taxes paid at closing when buying or selling a home. Keep in mind, you can deduct any qualifying real estate taxes that you paid to state, foreign, or local government agencies (such as your town office, county, parish, or other tax assessor). Mortgage Insurance Paid: Another common deduction related to your home is Qualified Mortgage Insurance Premiums. The most common type of mortgage insurance premium is Private Mortgage Insurance (PMI). However, you can also deduct mortgage insurance paid to the Department of Veterans Affairs, the Federal Housing Administration, and the Rural Housing Administration (or their successor organizations). Your qualified mortgage insurance is usually reported on Form 1098, Box 4 or on a year-end statement. Home Energy Credits: If you purchased and installed qualifying energy-efficient property in your main home you may be eligible to take a tax credit. You must have purchased new energy-efficient equipment, and the equipment must be expected to remain installed for at least five years. Here are a few common examples of home improvements that could qualify as tax credits: solar hot water heaters, solar electricity equipment, and wind turbines. The credit which runs through 2016, is 30% of the cost of qualified property. There is no cap on the amount of credit available, except for the fuel cell property. Generally, you may include labor costs when figuring the credit and you can carry forward any unused portions of this credit. Qualifying equipment must have been installed on or in connection with your home located in the U.S.; fuel cell property qualifies only when installed on or in connection with your main home located in the U.S. For more information, please review IRS Form 5695: Efficient Home Improvements . Mortgage Interest Credit Certificate: If you were issued a qualified Mortgage Credit Certificate (MCC), you may be eligible to claim a Mortgage Interest credit. To qualify for this credit, the MCC must have been issued by a state or local governmental unit or agency under a qualified mortgage credit certificate program. D.C. First-Time Homebuyer Credit: If you purchased a main home in the District of Columbia during 2011, you may be entitled to an additional credit. See Form 8859 . This credit is no longer available for current purchases but can still be carried forward from prior years when the credit was allowed.

Tax Benefits for Education

Whether you are paying for a college education or a teacher buying items for your classroom, education credits and deductions can help lower your tax bill. The American Opportunity Credit, Lifetime Learning Credit or the Tuition and Fees

Please explain all of the deductions and credits that are available related to my auto and my other personal property.

Car Registration Fees If you own a car, you probably pay a yearly fee for car registration. All or part of this registration fee may be an additional deduction for you on your return. The IRS will allow you to deduct any taxes included in your registration fee that you are charged based on your vehicle's value. This does not include the yearly tag fees but only the Ad Valorem Tax which is in addition to the tag fee. Example: Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. You paid $32 based on the value ($1,500) and weight (3,400 lbs.) of your car. You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. The remaining $17 ($.50 × 34), based on the weight, is not deductible. Property Taxes on Personal Property (motor homes, boats, etc.) Personal property tax is deductible if it is a state or local tax that is: * Charged on personal property, * Based only on the value of the personal property, and * Charged on a yearly basis, even if it is collected more or less than once a year. A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. If the tax is partly based on value and partly based on other criteria, it may qualify in part. Common examples of property that are taxed like this include mobile homes, boats, motor homes, airplanes, and other recreational vehicles.

Indiana Additions to Income

. On the above schedules, you are allowed to claim a deduction for taxes paid which are: * based on, or * measured by income, and * levied at a state level by any state in the United States. If you claimed this kind of deductions on any

How do I choose the 1040-EZ, 1040-A or 1040 form?

are the IRA deduction, the student loan interest deduction, the educator expenses deduction, and the tuition and fees deduction 3. You do not itemize deductions 4. Your taxable income is less than $100,000 5. The only credits you are claiming

Other Nontaxable Income to compute Household Income

in Household Income the following losses and deductions to the extent they reduced federal adjusted gross income : • Health savings account, educator expenses, domestic production activities and the Archer MSA deductions • Capital loss carry forward