Limits on Itemized Deductions For Your 2010 Taxes
April 15th is just around the corner, which means getting your taxes in order is a must. In this article, we look at limits on itemized deductions for your 2010 federal taxes.
The taxes you owe the government are determined by taxing your gross revenues for the year, subtracting legal deductions and then figuring out the tax amount you own based on applying your adjusted gross income to the tax tables. Looking at the legal deductions, taxpayers have the choice of claiming a standard deduction or itemizing their individual deductions if that will return a bigger tax refund. This can be a tricky question because limits are put on the amount you can claim for each itemized deduction category. Let’s take a look at the 2010 figures.
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Mortgage Loan Interest – The mortgage loan interest deduction is starting to face some heat from politicians seeking tax revenues, but the limit on it remains the same for 2010. You can deduct interest paid on loans up to one million dollars. If you are married filing separately, the amount is $500,000 to each spouse.
Home Equity Loan – You can deduct interest on home equity loans up to $100,000. If you are married filing separately, the amount is $50,000 for each spouse.
Contributions to Charities – You can deduct the full amount of contributions so long as the amount doesn’t exceed 50 percent of your adjusted gross income. The key point to understand, however, is the documentation requirements are more detailed. Make sure to speak to your account regarding the documenting requirements.
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Medical Expenses – You can deduct medical expenses up to 7.5 percent of your adjusted gross income. At the rate medical expenses accumulate, this is a serious cap on the deduction.
Miscellaneous Expenses – Taxpayers can deduct amounts over 2 percent of the adjusted gross income.
The limits on itemized deductions should be taken very seriously. This is an area where the IRS pays close attention. Blow through the limits and you can expect an audit from the revenue agent boys. Most people prefer to avoid such meetings.