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 problems.
- Adding ramps.
- 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.
Yes, there are some good taxesSome taxes really do come in handy.
If you live in a state with an 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 both sales and income taxes, 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.
An interest(ing) deductionEvery 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 a 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.
Countless charitable contributionsYou 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.