Lower Your Taxes by Taking Every Deduction You Can

Everyone is entitled to reduce their taxable income by tax deductions. You can generally choose between your standard deduction or your itemized deductions, whichever figure is more advantageous. Together, your deductions and your personal exemptions reduce your adjusted gross income to arrive at your taxable income. So these two items are your last chance to reduce taxable income before your regular income tax is computed.

Expenses you can claim as itemized deductions include medical expenses for health insurance, doctor visits, lab fees, prescription medicine, and other medically necessary treatments. Some expenses related to your health, such as improvements to your home, non-prescription medicines and special foods, may not be tax-deductible. If you have a seeing-eye dog, your dog-related expenses may be tax-deductible as a medical expense, according to AccountingWeb.

Other itemized deductions include job-search expenses, mortgage interest, real estate taxes, and charitable donations.

Itemized deductions can be limited by various thresholds.

Some expenses are tax-deductible, but you don't need to itemize on the Schedule A. Instead, you take these deductions directly on 1040 page 1 as adjustments to income. These tax deductions are frequently overlooked, but shouldn't be. Even taxpayers who take the standard deduction can still claim the following tax deductions:

• Moving Expenses if you relocated for a job
• Student loan interest
• Traditional IRA contributions
• Alimony paid
• Early withdrawal penalties paid if you cashed out a bank certificate of deposit