Day 3: Decide on deductions
The real fun begins today with deductions. You can choose between the standard or itemized deduction amount.
Most taxpayers use the standard deduction rather than bothering with tracking every expense to itemize. If the standard amount works for you, great!
If, however, you have substantial tax-deductible costs, such as additional home-related write-offs, medical expenses and charitable donations, you'll want to maximize those expenses by itemizing.
The important thing when it comes to itemized deductions is to have the documentation to back up your full array of Schedule A itemized costs.
Go back to the material you collected on day one. Your W-2s will show how much state and local income taxes you paid. Find that statement from the mortgage company showing your loan interest and property tax payments. And dig out the receipts you got for all your deductible donations.
Make sure you don't miss any, because all these amounts will help whittle your income to the lowest possible taxable amount.