| You often hear someone say, "it's tax deductible." In | | | | income. So at $50,000 you could only deduct $25,000 |
| truth the expense mentioned may be deductible, but | | | | in donations. This one doesn't come up as a limiting |
| you may not be able to deduct it. Why would that be? | | | | factor very often. |
| Usually, the expense referred to is deductible as an | | | | The most significant limitation on deductibility is the |
| itemized deduction. The percentage of tax filers that | | | | standard deduction amount. The standard deduction is |
| itemized in 2006 (the most recent year available) was | | | | $8,400 for head of household, $5,700 for single filers |
| 13.80. So, you would have to be one of one in seven | | | | and married filing separately, and $11,400 for married |
| taxpayers who actually itemize to use the deduction. | | | | filing jointly. The amount of itemized deductions you |
| But just because you itemize doesn't mean that you | | | | have must exceed these amounts before you can |
| can deduct some expenses. Medical expenses, which | | | | make use of them. This is why less than 14% of filers |
| include health insurance premiums, doctor visits, hospital | | | | can take advantage of itemized deductions. |
| costs, dental, eye glasses, chiropractic, etc., are limited | | | | Even expenses such as mortgage interest and |
| to 7.5% of gross income. This means that if your | | | | property taxes may not be deductible if they don't |
| income is $50,000 before any medical expenses can | | | | push your total deductions over the limit. One method |
| be deducted they would have to exceed $3,750. | | | | for maximizing property taxes is to pay one year's |
| Other items such as expenses necessary for | | | | taxes in early January and the next year's taxes in |
| employment and miscellaneous deductions are limited | | | | late December. By doing that two year's of taxes are |
| by 2% of your gross income. Using the same $50,000, | | | | lumped into one year. |
| you would have to spend more than $1,000 before | | | | So you see that before you make an expenditure |
| these expenses are deductible. | | | | thinking it is tax deductible, you must consider whether |
| Charitable donations are limited by 50% of gross | | | | it really is to you. |