The different types of federal tax deductions always sound quite confusing for the vast majority of taxpayers because of the legal complications associated with the same. Those who file their tax returns without any expert help often end up losing money by failing to claim for some big deductions that they otherwise qualify for. Your awareness is the key when it comes to making the best use of the different types of federal tax deductions.

In general, these tax deductions can be broadly divided into two categories – standard and itemized. The standard deductions depend upon the nature of your filing status (such as, qualifying widow or widower, head of household, married filing separately, married filing jointly and filing as a single individual) and is generally a fixed amount of money that grows up with every passing year as per a set formula (as designed by the US tax laws). The itemized deductions, on the other hand, refer to the money spent on certain types of expenses. Following is a brief rundown on it.

Investments

If you have hired an accountant or a financial expert to help you with your tax planning, you can deduct the amount of money that you paid to them as fee for their services. Likewise, if you are investing your money somewhere, you can deduct the expenses that incurred during the procedure. However, it is very important for you to keep in mind that the total amount of deductions in this category must not exceed 2% of your gross annual income.

College

If your gross annual income is $65000 (if filing individually) or $130000 (if filing jointly) and you are a student attending a college or school or any other academic institution, you can qualify for up to $4000 of deductions in this category. Later, when you start paying off your student loans, you can be eligible for certain deductions on the amount of interests as well.

Teachers

As per the US laws regarding federal tax deductions, teachers get an added advantage, as they can claim a special deduction of up to $250 on anything they buy during the tax year they are filing the return for.

Child Care

Divorced parents who are paying for childcare as part a court order can get those payments deducted from their taxes.

Charitable Contributions

The different types of federal tax deductions for charitable contributions can be divided into two categories – the first category includes gifts (not in cash or check) and the second one includes any contributions made through check or in cash. When you give household goods, sports equipment, toys, clothes and other such gifts as charity, you can deduct the resale value of all those things from your taxes.

Almost all charity organizations these days carry a value guide with them who can help you calculate the resale value of the items you are donating. Make sure you maintain a list of all such items that you are donating and any receipts thus received from charitable organizations.

On the other hand, charity made by check or cash can include any regular or irregular amount of money that you pay as a one time payment or as a weekly or monthly contributions to mosque, temple, church or other religious or charitable organizations, such as UNICEF, Salvation Army Santa and others. Keep track of every single penny that you are donating in cash or in check here and there every week or every month or every year. Not to mention, you must also keep all the receipts (if any) safe with you to avoid tax audit.

Mortgage Interest

You can also qualify for federal tax deductions for the amount of money paid as interest on your home equity loans or on simple mortgage loans. In order to get the details about the interest paid during the tax year, you can simply ask for the form 1098 from your mortgage lender; this form covers all the details regarding the interest you paid on the mortgage loans. If you have obtained the loan from a private mortgage company, you will also have to provide the federal identification number, name and address of that lender while you are claiming this deduction in your tax return filing.

New And Old Refinance Points

If you are refinancing a mortgage loan, you must pay special attention to the amount of money you are paying as points. The US tax laws allow you to deduct unamortized points balance (if any) from a previously refinanced loan. Besides that, you can also deduct the total monthly amount of money you are paying as points on the new loan.

Local And State Taxes

Certain types of federal tax deductions are also available on local or state taxes that you have paid, such as outstanding local or state tax balance paid during the current tax year, personal property taxes, real estate taxes, disability or unemployment taxes and any other taxes withheld from your paycheck by the local or federal tax authorities.

Medical Expenses

Federal tax deductions can also be claimed on certain types of medical expenses, such as conveyance expenses to and from doctors and pharmacies, Orthodontia, Contact lenses, Eyeglasses, Payment for prescription drugs, Certain alternative therapies, weight loss programs (as recommended by a specialist doctor), medical equipment, fees for physical therapy, long-term care insurance and health insurance expenses.

However, it is very important for you to keep in mind that the federal tax laws do not allow you to claim tax deductions for any insurance premiums that got deducted directly from your paycheck on a pre-tax basis. If you are claiming for deductions on those insurance premiums, you are in fact claiming it again (as that money has already been deducted from your income record).

Retirement Contributions

If your annual income touches or exceeds a certain point, you can also qualify for federal tax deductions of up to $2000 on retirement fund contributions. Certain additional tax deductions are also available on contributions made to IRA or other such retirement fund accounts. However, it is very important for you to keep in mind that all types of federal tax deductions come with certain legal limitations. If you are not sure about how much deductions you qualify for in which category, you must always speak to a tax attorney first.