1. Medical and dental expenses.
2. Taxes
3. Interest expenses.
4. Charitable contributions
5. Casualty and theft losses

Some itemized deductions are not allowed until they exceed a certain “floor” amount — medical expenses, miscellaneous deductions such as investment expenses, safe deposit fees, professional education, employee job-hunting expenses and tax-preparation fees.

Tips:

• Determine the best timing for claiming itemized deductions based on the type of deduction and any limitations.
• Estimate your total itemized deductions to make sure the total exceeds the standard deduction. Go to www.irs.gov to find the current year amounts.
• Summarize your expenses by type and limitation to determine if they qualify for a deduction–if you expect to itemize, accelerate. If not defer.
• Bulk up on your itemized deductions in one year and defer in the next. So every other year you will itemize and take the standard deduction in the other year.
• Medical Expenses – only deductible if greater than 7.5% of your adjusted gross income:
  • Calculate an estimate (or your best guess) of what 7.5% of your adjusted gross income will be.
  • Keep a running total of your out-of-pocket medical expenses during the year.
  • If you are near the threshold, determine if there are expenses you can accelerate—i.e. elective medical expenses can be accelerated or deferred—i.e. orthodontia payments for your dependents. Note medical expenses are deductible when paid not when services are rendered.
  • Mileage to and from medical treatments count too. Just keep a mileage log. Visit www.mileagepad.com for an online mileage tracker.
  • If you are low on cash, charge it.
• Real Estate Taxes – if not paid in your mortgage payment, you can accelerate or defer your payment. Caution here – accelerated payments taxes can cause the dreaded AMT (alternative minimum tax).
• Charitable Contributions – deductible if paid to a qualified charity. Political organizations don’t count.
• Accelerate charitable contributions to maximize your current year itemized deductions.
• If you are low on cash, charge it but no later than Dec 31st

Although maximizing your itemized deductions is an important aspect of tax planning, there are other issues that you may need to consider in light of your overall tax scenario. We can provide you with planning options that enable you to achieve the greatest tax savings possible. Please contact our office at your earliest convenience to make an appointment to discuss your tax planning options.

Disclaimer: This article and the information on this website, is intended for general information only. Consult with your CPA for information relating to your specific situation.