Put More Money Back In Your Pocket Through Strategic Use of an Itemized Deduction

Do you want to reduce your tax bill and save money? If so, taking advantage of itemized deductions is a good way to maximize your chances of putting more money back in your pocket. Here’s a closer look at itemized deductions and how you can use them strategically to reduce your tax burden.

Know the Rules for Filing an Itemized Deduction

The IRS allows taxpayers who take the standard deduction to claim certain expenses as itemized deductions, which are subtracted from their taxable income. For an expense to be eligible for a deduction it must meet the criteria established by the IRS. To be able to file taxes planning out these items should become important if they add up beyond what can be deducted with the standard deduction.

Which Expenses Are Deductible?

Some common expenses that fall under itemized deductions include charitable donations, medical expenses above 7.5% of income, state and local taxes paid, interest on mortgages or home acquisitions (up to certain limits), certain investment expenses such as broker fees and domestic travel mileage over 14 cents per mile. Many other lesser-used deductions exist, some of which may apply to you depending on your circumstances.

How Can You Strategize Your Itemized Deductions?

One way you can strategize your itemized deductions is by timing them strategically during different tax years; this will help increase the amount you can deduct in total from year to year. For example, if you own a home or have medical bills or property taxes that exceed 10% of your adjusted gross income in one particular year (depending on where you live) then these costs might be deductible; if that same cost won’t exceed 10% threshold any other year then it would be advantageous to deduct it when it does exceed 10%. This allows for more flexibility in reducing your tax bill year-to-year since only unreimbursed medical expenses, mortgage insurance premiums, and property taxes are deductible annually as opposed to other deductions like charitable giving. Another strategy is taking advantage of tax credits such as the Earned Income Tax Credit (EITC) which can bring down actual dollars paid instead of just reducing taxable income – this could bring additional savings depending on how much return and credit over payment exists based on prior estimates throughout filing timeline changes within one given calendar year(s).

In Summary

Using itemized deductions strategically is a great way to reduce your taxable income and put more money back in your pocket each year; however, it is important that you understand which expenses qualify for deduction and how best to strategize their timing throughout filing periods in order boost savings potential opportunities available through use with intended purposeful implementation/applications analysis/adjustments accordingly where needed most according for best maximizing specific outcomes optimally achievable ultimately when all factors being taken into consideration too thoroughly before finally making corresponding finalized decisions thereafter henceforward thereafter continuing like so again going forward eventually perhaps eventually after all time frames pass considerations applicable fully applicable anyway sensible thoughts inclusive opinionated notions seriously taken into account if not included accurately enough possibly etc nevertheless something still could be attempted attempted at least