How to Account for Allowable Taxes

Taking inventory of your expenses for the year, mark off the items that are taxable. A full listing of taxable items can be found in IRS publications. There are some items that are not deductible for tax purposes, such as decorative renovations to your home. If you renovate and want to deduct expenses, it would have to be the construction of a new driveway, a new roof or renovations that improve the structure of the house and grounds. Allowable taxes are garnered from your list of itemized deductions. Always keep paper receipts and electronic records for reference at tax time for a minimum of five years after claiming the deductions.

• 1

  Write in a paper notebook or electronic file the specifics of any medical or dental costs paid during the tax year, regardless of when the services were rendered. The percentage allowed for the deduction is based on your adjusted gross income for the tax year.

• 2

  Keep the 1099 forms and interest forms for your home mortgage payments. The deduction is based on the number of points from your mortgage payments. The amount can be deducted from 25 percent to 100 percent for the lifetime of the mortgage loan.

• 3

  Research the charity before you donate. A charitable organization must have a 501(c)(3) designation from the IRS. Any amount over $250 in contributions must have a written attachment to Schedule A from the charitable organization. While the allowable base deduction is $2,500, additional contributions can be listed on Form 8283.

• 4

  Take a picture of the tangible property item that you want to donate. Make the picture part of your records for all matters regarding the appearance of your item. You can deduct the fair market value of donated property, regardless of how much money you spent on refurbishing or renovation. The fair market value is the market value minus the used condition of the property with regard to what price the item would generally sell for.

• 5

  Write down every date, time and location you fill your tank with gas. Then deduct the dates and times that you used your own gas for business traveling. The IRS allows deductions for gas and mileage only when it pertains to business, charitable functions, medical transportation and moving expenses. The amount is calculated by cents on the mile, ranging from 14 cents to 50.5 cents per mile: service to a charitable organization is 14 cents on the mile; medical transportation or moving expenses is 19 cents on the mile; and business transportation is 50.5 cents on the mile.

• 6

  Create a personal itinerary for business travel listing the meals, hotel tax, books, seminar fees, airfare tickets, telephone and tips given. The only deductible expenses are those that you paid, but not the payments covered by or reimbursed by your employer. If you're required to wear a company uniform on your business trip, you can also deduct the cost of cleaning the uniform.