13 Ways to Maximize Your Tax Deductions Before End of Year

Maximize Your Tax Deductions Before the End of Year

One of the most fundamental decisions to make when filing a tax return is whether to itemize deductions or to use the standard deduction. The decision tends to be a financial one: You should generally itemize your deductions on your federal form 1040, Schedule A, if your itemized deductions are more than your standard deduction. For 2010, the standard deduction for married couples filing a joint return is $11,400. The standard deduction for individual taxpayers and married couples filing separate returns is $5,700. The standard deduction for heads of household is $8,400.

Some taxpayers, however, must itemize deductions because they do not qualify for the standard deduction. Those taxpayers include nonresident aliens (those who file a form 1040-NR) and dual-status aliens. Additionally, married couples filing separate returns must make the same election: if one spouse opts to itemize deductions, the other spouse must also itemize deductions.

About two out of every three taxpayers will opt for the standard deduction. That means that tens of millions of taxpayers will choose to itemize. If you're one of those taxpayers filing a Schedule A this year, WalletPop brings you a quick checklist of ways to boost those deductions before December 31.

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13 Ways to Maxim... One of the most fundamental decisions to make when filing a tax return is whether to itemize deductions or to use the standard deduction. The decision tends to be a financial one: You should generally itemize your deductions on your federal form 1040, Schedule A, if your itemized deductions are more than your standard deduction. For 2010, the standard deduction for married couples filing a joint return is $11,400. The standard deduction for individual taxpayers and married couples filing separate returns is $5,700. The standard deduction for heads of household is $8,400.

Some taxpayers, however, must itemize deductions because they do not qualify for the standard deduction. Those taxpayers include nonresident aliens (those who file a form 1040-NR) and dual-status aliens. Additionally, married couples filing separate returns must make the same election: if one spouse opts to itemize deductions, the other spouse must also itemize deductions.

About two out of every three taxpayers will opt for the standard deduction. That means that tens of millions of taxpayers will choose to itemize. If you're one of those taxpayers filing a Schedule A this year, WalletPop brings you a quick checklist of ways to boost those deductions before December 31.

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Buy Those Prescr... The cost of items such as prescription eyeglasses or contact lenses are deductible medical expenses. If you pay for them by the end of 2010, you can deduct them on your taxes.

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Go to the Dentis... Allowable medical expenses also include fees paid to doctors. Again, be sure and pay by the end of the year.

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Prepay Your Taxe... You can deduct the payment of state, local and foreign income taxes, real estate taxes, personal property taxes, state and local sales taxes, and qualified motor vehicle taxes on your federal income tax return. If you're going to have to pay it in 2011 anyway, you can pay a little early and take the deduction for 2010.

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Pay Your Back Ta... Any prior year's state or local income tax you paid during the year would be deductible on your federal income taxes for 2010. Why not get those old bills out of the way and start 2011 with a clean slate?

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Pay a Little Bit... Mortgage interest payments (but not principal) are generally deductible. Paying it off a little faster can, in some cases, actually reduce the overall cost of your mortgage (read the fine print to be sure) and accelerates your tax deduction.

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Make an Extra St... Same principal as the mortgage interest payments: You might reduce the cost of your loans if you make extra payments, and you can deduct the student loan payments on your income taxes.

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Donate to Charit... Donations made by year-end may be deductible on your 2010 taxes.

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Pay for Tax Advi... Legal fees related to producing or collecting taxable income or getting tax advice are tax deductible -- and the end of the year is the best time to do tax planning.

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Go to Vegas Gambling winnings are taxable to you as income but gambling losses are deductible on Schedule A to the extent that you have income. So go ahead, roll the dice.

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Pay your Profess... If you're like many Americans, you get reminders practically all year long about joining various professional organizations. If you re-up by year-end, the reminders will stop and you can take the deduction.

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Pay Your Tuition... Fees for work-related education are deductible. If you're starting school in January, consider paying tuition in December to take advantage of the deduction a bit early.

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Make a Payment o... Lawyers, doctors and other professionals generally maintain malpractice insurance -- and the fees can be quite hefty. Making a payment by year-end means you can lessen the pain by claiming a deduction for 2010.

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Send Out That Re... Job search expenses may be deductible. And what better way to start the new year than with a lead on a new job?

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Biggest Departur... Click here for a look at the people, products and brands we said goodbye to this past year.