Table of Contents
Tax deductions can reduce your taxable income, lowering the amount of tax you owe. Knowing which deductions are common and understanding the documentation required can help ensure you claim everything you’re entitled to and avoid issues with the IRS.
Common Tax Deductions
Several deductions are frequently claimed by taxpayers. These include mortgage interest, state and local taxes, charitable contributions, medical expenses, and business expenses. Each deduction has specific criteria and documentation requirements.
Documentation for Mortgage Interest
Mortgage interest is reported on Form 1098 provided by your lender. Keep this form along with records of any additional interest payments made outside of the form. This documentation is necessary to substantiate your deduction claim.
Supporting Charitable Contributions
Receipts or acknowledgment letters from charities are required for donations. For contributions over $250, you need a written acknowledgment from the charity that details the amount and date of the donation. Bank statements can also serve as proof for smaller donations.
Medical and Business Expenses
Keep detailed records of medical expenses, including bills and insurance reimbursements. For business expenses, maintain receipts, invoices, and mileage logs. Proper documentation ensures these deductions are valid if audited.