Truth 11. Dealing with deduction limitations
Each year, around a third of taxpayers find that itemizing their deductions is the best way to reduce their tax bill. They hang onto receipts and carefully transfer amounts to Schedule A to come up with a figure that’s more than the standard deduction amount.
But sometimes, the extra work doesn’t pay off. Some itemized expenses are worthless because they don’t meet specific threshold limits. And even the total itemized amount could be cut when a filer’s income is too large.
Medical expenses—Many types of medical expenses are deductible on Schedule A. But to claim them, they must add up to more than 7.5 percent of your adjusted gross income (AGI).
For example, if your AGI is $100,000, ...