If you decide to skip all the standard income tax deductions and file a 1040EZ tax return, you will be given a standard deduction based on your filing status. This is the amount that gets deducted from your income before determining how much tax you should have paid. Without a lot of deductions like charitable contributions or mortgage interest, this is probably the way to go, but if you have deductions, you could be costing yourself tons of money.

There are tons of standard income tax deductions you can claim, especially if you have a small business, but following are the deductions most people can take. A deduction for each member of your household is one of the first things you deduct. For each person you get to deduct a certain amount from your income. The next deduction most people can take is mortgage interest. If you own your own home, the amount of money you pay every month on interest can be deducted from your income. If you donate to charity, and most people do, you can deduct this as well. That means that all the money you donate to your church every Sunday reduces the amount of taxes you have to pay. Student loans are another common source of income tax deductions. You are allowed to deduct the interest portion of your student loans. Other deductions that are less common include medical expenses and expenses related to child care, but you should really consult a tax professional if you plan to go beyond the usual deductions.

Hopefully this quick list of income tax deductions will help you identify all the things you can deduct from your income to reduce the amount of money you owe the government.

For the record, I am not a tax professional. I have been doing my own taxes by myself or with the help of a tax professional for 20 years so I know a few things, but I cannot offer you legal advice.

I recommend income tax software because it is very good at reminding you of things that you can legally deduct, but won’t let you accidentally do things that will get you in trouble. If you have a complex return, you really should seek a tax professional as spending a little extra money is better than big fines if you get audited.

In doing taxes for the last few years, I have had plenty of people come in not prepared to file their tax returns. There have been plenty of times where I opened the the W-2′s or other important tax information for people. They have no idea how much they made for the year, how much was withheld, or even if the Social Security and Medicare taxes where withheld at the correct rate. I had a client one year who had less than $200 withheld from his pay throughout the year, and was shocked when he learned that he owed around $1500. It pays to pay attention! But there are ways to save tax too – so more about tax deduction matters.

Taxes and filing an accurate tax return are very important, and I find it hard to believe that a lot of people do not even open their tax information to find out if all of the information is correct. The interview will go a lot smoother and faster if you are prepared and you have all of your records ready, plus your return will be a lot more accurate. Plus, it is really not fair to the other clients if a tax preparer has to spend 10 minutes opening stuff up that the taxpayer should have already done. That is 10 more minutes other customers have to wait, and everyone hates to wait, correct? It usually seems to happen during ‘peak season’, when we are the busiest, and there are 4 tax preparers and still 2-3 clients waiting.

‘Peak season’ runs for roughly 3 weeks, usually starting the second half in January and into the first week or so of February. Most of the filers during this time have do not have complicated tax returns, normally taking me 20-30 minutes to complete the return. Last season though, I did have a higher than normal number of complicated returns during peak than normal. I like the harder returns because they help keep me sharp. This usually involves digging for every legal tax deductions I can find.

Now, I don’t know how it is in other tax offices, but where I work, we are really going to be using due diligence. This means do not try to use a child that is not yours as a dependent, do not give us false information for your tax return, trying to take deductions you are not entitled to, things along these lines. We will ask questions. The IRS is really cracking down on fraudulent returns, and they have increased the penalties against tax preparers who file returns such as these. I also had to take a required course on fraud and ethics. Trust me, I’m not about to file a fraudulent tax return, I don’t want or need the IRS after me.

Start looking for potential tax deductions right now, especially if this will be your first time itemizing deductions. Keep your money in your pocket!

Another useful business tip – learn how to get extra money for your business, grant proposal example.

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