Tax Tip #9: How to Effectively Itemize

by David Bakke

how to itemizeIn yesterday’s post, I spoke of the power and benefits of itemizing your taxes.  Today, I’d like to go through the basic process that I have set up for myself that I feel allows me to best capitalize on itemizing.

And of course, I can only comment on the situations and tax considerations that are relevant to me.  I don’t own real estate, I don’t really play the stock market, so if there are some things that I fail to mention that you feel might be relevant to the conversation, please feel free to add them in the comments section.

There are four “biggies” as I see it that I do my best to track and stay organized for throughout the year.

I pay for as much stuff as I can with credit cards, that way the organization part basically just comes from scanning my credit card statements each month and filing them in their appropriate place. I do try to keep all pertinent receipts, but I think this system is a little more hassle-free.

The Four Biggies

UME’s (Unreimbursed Medical Expenses)-Pretty self-explanatory.  Its anything that you paid out for medical bills that you weren’t reimbursed for.  Over the counter stuff doesn’t count, and please do your due diligence to see what falls under this category and what doesn’t.

JSE’s (Job Search Expenses) Did you know that if you are in the job market that a lot of these expenses are deductible??  Mileage to interviews, resume writing fees, association dues, clothes for interviews, etc.  If you’re actively seeking employment, there could be some good deductions here.

JRE’s (Job-related Expenses) I have a credit card that I use just for this topic, so keeping track of it is a breeze.  I use this credit card for all my dry-cleaning expenses, and all my “uniform” expenses.  That is, whenever I need new ties or dress pants or shirts, it goes on this card.  At the end of the year, I just add up my charges on this card, and I’m done.  Mileage for your commute is also deductible; just be sure to follow the instructions.

Charitable Contributions-If you don’t currently donate stuff (whether its time or money or unwanted items) then you should.  Of course, your time isn’t tax deductible, but I say this only because if you have the ability to “give back” then you should.  It’s the Christian thing to do, if you were in a position of need, you’d probably want people to give you as much as they could, and finally, a lot of it is tax deductible!!  Just make sure it goes to a “qualified organization” and don’t over inflate the value of your stuff-this could lead to issues down the road.

 

So there you go.  This is basically the sum and substance of my entire organizational process for my taxes.  It’s not that hard, and I do feel that I generate more revenues (by paying fewer taxes) by keeping up with it.

 

Hope you found it helpful.

As always, comments and feedback can go below.

{ 2 comments }

1 Daddy Paul April 9, 2010 at 12:59 am

Good list. The big ones are home related expenses. Also State and local taxes are deductible they can add up!
.-= Daddy Paul´s last blog ..The best small cap funds =-.

2 David/Yourfinances101 April 9, 2010 at 10:08 am

Daddy Paul,

Thanks for the additions. I forgot about those.

We don’t pay local tax here, but its certainly a deduction.
.-= David/Yourfinances101´s last blog ..Tax Tip #15: The Many Benefits of Donating =-.

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