As noted in yesterday's tip about the super-sized standard deduction for married couples, most taxpayers use the standard deduction rather than itemizing. But don't think claiming the standard deduction locks you out of claiming deductions all together. Far from it.
Congress has created a slew of write-offs open to itemizers and non-itemizers alike. There's a $2,000 deduction for those who bought a hybrid car, such as the Toyota Prius, the Honda Insight or Civic Hybird. Also, there's a deduction for jury pay you had to report as income but had to turn over to your employer because your salary continued while you were away from the job doing your civic duty.
And the list goes on: You can deduct alimony you paid. Teachers and teachers' aids in public or private kindergarten through 12th grade can deduct up to $250 of out-of-pocket costs for books and classroom supplies. If your income is below $40,000 on a single return or $60,000 on a joint return, you can deduct contributions to a traditional IRA made as late as April 15. (The deduction is phased out as income rises $10,000 over those trigger points.)
Those paying back student loans can write off up to $2,500 of interest, if income is less than $50,000 on a single return or $100,000 on a joint one. This deduction gradually disappears as income rises to $65,000 and $130,000. If your income is too high to benefit from the Hope or Lifetime Learning education credits, you may be able to deduct up to $3,000 of college tuition you paid for yourself or a dependent. (This break phases out when adjusted gross income passes $65,000 on a single return or $130,000 on a joint return.)
If you moved to take a job -- even your first job out of college -- you probably can deduct the cost of getting yourself and your stuff to the new location (including 12 cents a mile for driving your own car). If you pay social security and medicare tax on self-employment income, you get to deduct half of that tab. If you're self-employed, you may qualify to write off 100% of what you pay for health insurance for yourself and your family. (On 2002 returns, this deduction was limited to 70% of the premiums.) Adjustments to income also include contributions to retirement plans for the self-employed and any penalties paid for breaking out of a certificate of deposit early.
And, that's not all. Run down the instructions that came with your return to make sure you don't miss a tax-saving write-off.
GETTING STARTED
