How can I make sure I get all my eligible deductions?

By Denise Appleby AAA
A:

Most tax preparation software does a good job. However, like any recipe, the end results are only as good as what goes into it. As such, whether you use tax preparation software or the services of a tax professional, you will want to ensure that you provide all the information and data necessary to ensure you receive all the deductions for which you are eligible.

The following are some of the deductions that are often missed:

  • Medical expenses for the taxpayer, his or her spouse, and dependents. If you itemize your deductions, you may be able to deduct medical expenses. These range from fees paid to doctors, chiropractors, psychiatrists, psychologists and Christian Science practitioners to amounts paid for participating in a smoking-cessation program (including drugs prescribed to alleviate nicotine withdrawal). The list of deductible medical expenses is very long and includes items you may not have thought would be there.

    But there are also some items that are excluded that one would think may have been included, for instance over-the-counter medicines. (To read more about deductions, see Which is better for tax deductions, itemization or a standard deduction?)

  • Moving expenses, whether you itemize or not. If you incur costs for moving because you changed your job or your job relocated, providing your move is closely related to when you start working. Certain limits apply.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>

  • Armed Forces reservists traveling more than 100 miles from home. If you are a member of a reserve component of the Armed Forces in the <?xml:namespace prefix = st1 /?>United States and if you travel in connection with your performance of services, you can deduct your travel expenses as an adjustment to gross income rather than as a miscellaneous itemized deduction.

Also remember that some expenses are subject to certain limits. For instance, in certain cases, you are able to deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income (AGI). If you use tax preparation software, it will likely perform the necessary checks and balances to ensure that you deduct only the maximum permissible amount. But to be on the safe side, you should consider having your return checked by a tax professional.

To read more frequently asked tax questions, see Common Tax Questions Answered, How do I avoid paying excess taxes on securities I have sold?, How can I make sure I'm ready to file my taxes? and How can I reduce the taxes on my inherited retirement assets?

Question answered by Denise Appleby, CISP, CRC, CRPS, CRSP, APA

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