There are numerous deductible expenses that one can claim on his or her annual taxes. These expenses generally are categorized as either personal or business expenses and within these two categories, there is a multitude of expenses that can be deducted in a variety of different scenarios. In determining which expenses are able to be deducted, a person must first separate the expenses that are personal from those that are business related.
Personal deductible expenses generally revolve around real estate, medical, and child care costs. In the United States, a person who owns his or her primary residence is entitled to deduct the mortgage interest that was paid during the tax year. A person can also deduct interest paid towards a home equity loan as long as the loan is less than the specified amount.
Medical expenses can also be deductible in certain situations. Although every country is different, in the United States a person can deduct any medical expenses that exceed a certain percentage of his or her annual gross income. The calculations change regularly, so it is always advisable that a person looking to deduct medical expenses seek the counsel of a knowledgeable tax professional.
Businesses can claim all deductible expenses that are either commonly accepted within their industry or any expense that is necessary for the successful operation of the company. Many necessary deductible expenses pertain to overhead costs such as rent, payroll, phone, and Internet costs. Other variable expenses can also be deductible if they are deemed to be commonly accepted. Such expenses would include advertising and marketing costs, legal fees, and office expenses, just to name a few. Any reasonable expense that is a part of the normal operations of a company can be deductible.
Charitable expenses can be deductible expenses for both individuals and companies. Any donation made to a charity or non-profit organization can be deducted. This can include tithes paid to a church or religious organization or donations made to a local non-profit group. Although charitable donations are deductible expenses, there is a limit to the amount that can be deducted. In the United States, deductions for charitable donations are limited to 50% of the annual gross income of a person or business.
The tax code of every country is vast and extremely complex. In order for one to determine the different types of deductible expenses that are available, it is advisable to seek the advice of an experience tax professional. A reputable accountant or tax attorney can provide invaluable advice about the deductible expenses applicable to a person's particular financial situation.
