How to prepare for itemized deductions?

Question

We are planning on buying a house next year, should we file with itemized deductions at the end of the year? I have heard that interest on a mortgage is tax deductable. If we do itemize our deductions, how should we prepare for that? What receipts/records should we save?

Answer 1

Itemized deductions come in many forms.

Medical expenses in excess of 7.5% of your AGI (bottom of page 1 on the 1040) are deductible, but you cannot double-dip. So if you have medical insurance through a job you will already have had tax relief on that and cannot take it again. You should keep receipts for anything paid out of pocket and not re-imbursed by a Flexible Spending Account.

Mortgage and Property Taxes - you will get a 1098 form the mortgage company. If they pay your property taxes for you they will normally tell you how much they paid. If you pay car taxes based on the value of the car you can deduct those too.

State Income Taxes - you can deduct state income taxes paid as well. The deduction for sales tax is in peril as Congress has left until after the election without renewing that provision.

Charitable contributions - keep all receipts (cancelled checks are generally not accepted). For donations of $250 or more the charity must state in the letter/receipt that it is a 501(c)(3) organization. Gifts in kind (Goodwill etc) must be valued and you should keep a detailed list of what you donate - "two bags of clothes" is not going to cut it with the taxman.

Miscellaneous Expenses - Do you have really high job expenses that are not re-imbursed by your employer? Keep receipts and claim them. Also keep a note of any business mileage. Those expenses must first be recorded on Form 2106. only expenses which are more than 2% of your AGI can be deducted. The other main categories in Miscellaneous are tax preparation fees and investment fees. only Miscellaneous Expenses which are more than 2% of your AGI can be deducted.

If all of that is more than your Standard Deduction you should itemize. If not take the Standard Deduction which, for a married couple filing jointly was $12,000 last year.

Remember that, even if you cannot itemize, some states will allow a tax deduction or credit for certain expenses. For instance, here in NC, you can get a tax credit for charitable contributions if you do not itemize.

Hope this helps.

Answer 2

Mortgage interest is deductible; cancelled checks &/or receipts are good. If you buy a house the mortgage company usually is required to send you a year end statement--- 1098 ---showing what you paid for the year in interest, points & property taxes. This info is based on current inormation and god only knows if it will be the same next year.

Answer 3

The only time you itemize deductions is when they are more than the standard deduction. You can't take both; so you choose the one that is more to give you a better tax break. Interest on your mortgage is deductible, but only if it is a certain amount. For all the rules and regulations visit www.irs.gov.

Answer 4

You really should buy a tax software package and it will walk you through the itemization.

Don't worry, your bank will send you the total interest paid on the year as well as the home taxes (which are also deductible).

You should get receipts for any donations, like to Goodwill.

Answer 5

HERE ARE A FEW WEBSITES TO GET YOU STARTED:

http://turbotax.intuit.com/tax_help/;jsessionid=1GETH0T1SSG4UCQIBMTRZNQKBAFSQF4K?source=ttcommain

http://www.jacksonhewitt.com/resources_library_top50.asp

http://www.irs.gov/taxtopics/tc500.html

THESE SHOULD HELP YOU OUT.
I MADE MYSELF AN EXCEL SPREADSHEET TO KEEP UP WITH THIS AND ALSO PURCHASED QUICKEN AND GET TURBOTAX AT THE END OF THE YEAR AND IT ASKS YOU STEP BY STEP FOR YOUR DEDUCTIONS. KEEP ALL OF YOUR RECEIPTS. YOU WILL BE ABLE TO DEDUCT MORTGAGE INTEREST AND TAXES ON YOUR PROPERTY AS WELL AS MEDICAL EXPENSES AT LEAST 7.5% OF YOUR INCOME. LOOK AT THE WEBSITES AND THEY TELL YOU PRETTY MUCH EVERYTHING YOU NEED TO KNOW. GOOD LUCK.

Answer 6

the well-known deduction is an entitlement outfitted into the tax code. you're allowed an volume (it differs finding on your submitting status) on which you do no longer could pay federal earnings tax. that's to boot on your very own exemption. you frequently pay attention human beings communicate of things being tax deductible. products like loan interest, sources taxes, state earnings taxes, scientific expenditures, etc. in case you have those style of deductions, they might decrease your earnings taxes in the event that they entire greater suitable than the well-known deduction which you're entitled to. As others have suggested, in the adventure that your itemized deductions do no longer exceed your well-known deduction volume, you does no longer hassle to record an itemized return.

Answer 7

Itemizing allows you to take an appraised value deduction for any donation made to http://www.realestatedonation.org/

Answer 8

1099 int for mortgage

property tax recipt

loco tax

other tax will be like TDI

and don't forget your state tax witholding on your w2

any dontation for church or non profit

If that beat the standard then go for it. married joint last year is $10,000.00