Getting the most from itemized deductions
Even some home remodeling might be just the prescription for
a tax break, as long as you
follow your doctor's orders
and the IRS' rules. If you need,
for example, to add a chair
lift to get up and down the
stairs, this generally is considered
a legitimate expense. Here are
a host of other deductible projects
that make a house more accessible
for a handicapped resident or
individual with chronic medical
||Widening doors and hallways.
||Lowering counters and cabinets.
||Adjusting electrical outlets and fixtures.
||Installing railings, support bars and
other bathroom modifications.
||Changing hardware on doors.
||Grading exterior landscape to ease access
to the house.
A word of warning, however: Elevators
generally aren't deductible. The IRS considers this
a structural change that could increase
the value of your house and therefore doesn't allow
it as a medical deduction.
there are some good taxes
Some taxes really do come in handy.
If you live in a state with income
tax, you already know the value of deducting those taxes
from your federal ones. But don't limit yourself here.
You also can deduct personal
property taxes, intangible taxes on investments,
real estate taxes and, in some cases, the
disability taxes you pay.
Go a bit further down the governmental
tax chain, too. Did you pay city or county income or
property taxes? Then throw them in there.
This means those taxes you paid directly,
not just the ones withheld from your paycheck and that
show up on your W-2.
On 2008 returns, taxpayers who itemize
still get the chance to deduct state and local sales
taxes they paid. If you live in a state that collects
sales tax and income tax, you'll have to choose which
tax amount you want to deduct on your Schedule A.
Residents of states that don't collect
income tax but do levy sales taxes will find this is
a great break. But it's worth checking out even if you
do pay state income taxes. If your income tax is low,
and you made a lot of expensive purchases during the
year, the sales tax deduction might cut your IRS bill
more than your income tax write-off.
Every homeowner makes sure he gets that statement from the mortgage
holder so that chunk of loan interest can be deducted.
But don't forget that second
home or vacation place with a mortgage. If it
meets IRS guidelines for personal use during the tax
year, then be sure to include interest paid on that
property's loan on your Schedule A, too.
If it's a new loan, make sure
you add in here any points -- money you paid the lender to get the loan.
Even if the seller paid the points, you, the
buyer, can write them off on your return.
If you don't get a statement from your bank
with information on points you paid, pull
out your closing paperwork and you'll find
it listed there.
Investments can help you out here, too.
Did you borrow money to buy that hot stock? Interest
on that loan is deductible.
You got the receipt from the Red Cross for your cash donation.
You have that one from the Salvation Army for that extra
couch you got tired of seeing in the garage.
You're done here, right? Wrong.
There are many noncash
contributions that taxpayers forget to add up.
|-- Updated: March 27, 2009