The U.S. government expects that any person filing taxes will want to deduct certain expenses. To make deductions easy, the IRS allows you to take a standard deduction. This lumps all your expenses into one sum. If you have more deductible expenses than the average person, you may get a bigger tax break by itemizing your return.
You may deduct medical costs on your joint tax return, if they exceed 7.5 percent of your annual gross income. These costs can include treatment, diagnosis and disease prevention. You can deduct medical expenses related to supplies, equipment and travel to and from doctor visits. In 2009, couples could calculate travel costs at 24 cents per mile, according to IRS Publication 17. The deduction does not apply for things you buy to maintain general health, such as supplements or vitamins. You can deduct medical costs for your spouse as long as you were married at the time your spouse incurred the expense.
Regardless of whether you itemize or take the standard tax deduction, you can deduct a portion of the tax you paid for a new motor vehicle. Non-itemizers must fill out Schedule L to claim the new car deduction. You may also be eligible to deduct business taxes, local and state taxes, fees collected by Indian tribal governments and personal property taxes. You must have paid the taxes in the tax year for which you are filing your joint return before taking the deduction. Some tax deductions may cancel others out. For example, you cannot deduct both local and state income taxes and the new vehicle deduction.
You may be able to reduce your taxable income by deducting the amount of interest you pay for approved items. The two main categories for interest deductions are mortgages and investment income. An interest deduction for a home loan allows you to deduct the interest you pay for a first and second mortgage, a home equity loan or a line of credit. You may be able to deduct interest for more than one home. In some cases, you can also deduct mortgage points paid. If you get a loan to purchase an investment property, you may be able to deduct the interest you pay for the loan.
Non-Reimbursed Business Expenses
If you pay out of pocket for any business expenses, and your employer does not reimburse the cost, you can deduct the expenses on your joint tax return. Couples filing jointly may deduct expenses for both spouses. While you can't deduct the cost of driving to or from work each day, you can deduct expenses for running company errands. In 2009, you could deduct 55 cents per mile for non-reimbursed business travel logged in your car. Business expenses can include travel, entertainment, transportation, gifts and meals.
Each year the IRS may include miscellaneous deductions you can take when filing jointly. Keep in mind that taking deductions reduces your income for filing purposes. If you have to use your tax records to confirm your income in upcoming years (such as when you want to buy a house), the deductions may make it look as if you earned less than you actually did.
- A businessman calculating expenses at tax time image by Christopher Meder from Fotolia.com
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