Itemized Deductions Can Allow for Lower Tax Costs

Elizabeth Maresca on New York 1, March 11, 2014

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Whether you go standard or itemize, deductions are a way to lighten your tax load. The simplest is the one that applies to the people you care for - financially speaking.

"So if you have children, or perhaps you're taking care of your aged parents, they may qualify as a dependent, and that reduces your income," says Bob Meighan, vice president of TurboTax.

That's one you don't need to itemize to get and there are others as well, like the interest you pay on your students loans.

"Because once you finish school you're still indebted to pay that student loan off and so you can have student loan interest for many years to come," says Meighan.

In order to itemize, you need to know your deductions will exceed the standard amount. Homeowners are often seen as the ideal candidates because they have a few big ticket items that give them a head start.

"When you own a house you have real estate taxes, those are deductible," says Elizabeth Maresca, a professor at Fordham University School of Law.

"You can deduct your home mortgage interest," says IRS spokesperson Peggy Riley.

Clean out the closets in that home and anything you donate can also be deductible up to its fair market value. But keep in mind, it has to be in good condition.

"So they can't just have holes and rips that nobody could use them," says Riley.

And you need to get a receipt, or at least save proof.

"We all have a wonderful camera in our pocket. Pull out your cell phone, take a picture of the items that you're donating and that is the best evidence that you have if the IRS ever comes back at you," says Meighan.

Of course there are a plethora of business expenses that can add up to savings, even if you're out of work.

"So if you're traveling to look for a job or you're printing out resumes and buying paper, if you're maybe paying someone to help you build your resume, all of that is deductible," says Maresca.

And if you're someone who works non-stop - answering email on the train ride home or using your laptop to do research after hours - you might consider deducting the cost of your cell phone bill or Internet service.

"That generally will count as a business expense, but just make sure you keep good records," says Meighan.

And while it may be a bear to add up all those receipts come tax season, the pay off will likely be worth it.

"The more deductions you have through itemization, the lower your tax will be," says Alan Kahn, a certified public accountant.