What Can I Claim on My Taxes When Itemizing?
The Internal Revenue Code provides taxpayers with an array of personal expenses that qualify as itemized deductions. An election to itemize deductions requires that total annual expenses exceed the standard deduction amount. Each deduction is governed by separate rules and requirements that taxpayers must be familiar with before completing a tax return.
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Mortgage Insurance Premiums
Qualified mortgage insurance premiums can be included in itemized deductions if paid pursuant to a contract entered into after 2006 that is related to a mortgage on a first or second home. The mortgage insurance must be provided by the Department of Veterans Affairs, Federal Housing Administration, Rural Housing Service or a qualified private insurer.
Tax assessments charged by state and local governments on real property located within their jurisdictions can be deducted on a personal income tax return. To qualify as a deductible expense, the tax must be based on property value and imposed uniformly throughout the community. Additionally, the tax revenue must be used for the general welfare of the community and not raised for specific projects or purposes.
Motor Vehicle Tax
Taxpayers with an adjusted gross income below $135,000 are eligible to deduct the state and local sales and excise taxes related to the purchase of a new motor vehicle. If the vehicle is purchased in a state that does not impose a sales tax, the title registration and
other government fees charged can be deducted. Qualified purchases include passenger automobiles and motorcycles less than 8,500 pounds and most motor homes.
The interest paid on a mortgage used to fund the purchase or construction of a home is tax deductible if the mortgage is secured by the home. The annual deduction is limited to the interest that has accrued on the first $1 million of principal used to purchase up to two personal residences. Points, origination fees and loan discounts are included in mortgage interest and can be deducted in the year paid.
Property losses caused by theft, vandalism, fires, storms, or car and boat accidents are included in itemized deductions. To qualify for the deduction, each individual loss must exceed $500, and total losses for the year must exceed 10 percent of adjusted gross income. Taxpayer losses that occurred in a disaster area that warranted federal disaster assistance are not subject to the 10 percent adjusted gross income limitation.
A deduction is allowed for educational expenses such as tuition, fees, books, supplies and transportation costs if attendance is required by an employer or is necessary to maintain and improve job skills for a current profession. However, the deduction may not be taken if the purpose of the education is to meet the minimum educational requirements for the profession or prepares the taxpayer for a new career.Source: ehow.com