Schedule A is a happy place. On Schedule A you can reduce your federal income tax if you have enough itemized deductions. If you do not have enough itemized deductions then you will simply get the standard deduction. Many of us don't have enough deductions from year to year to take advantage of itemized deductions, however, if you prepay some of your expenses before the end of the year and purchase extra necessary items now, you may be able to itemize deductions this year. Let's look at some of the items you can prepay or group this year as well as some less common items you can deduct.
Thinking about quitting smoking and losing weight this holiday season? Great! Not only will you contribute to your health, but if you quit smoking with prescribed products, or join a weight loss program after a treatment for specific disease, you can add these elective expenses up. Stock up on contact lenses, medical supplies such as special compression hose and parts for crutches or walkers, even things like hearing aid batteries before the end of the year. This way, you will be more likely to have these expenses exceed 10% of your adjust gross income (AGI) so you can deduct them. Don't forget to purchase your long-term insurance now and pay your January premium payments before the end of this year.
Pay for your 2015 licenses now. Grouping unreimbursed employee expenses, such as safety equipment, licenses and regulatory fees, and union dues, can help you "increase" your 2014 deduction. Document the gifts for your business associates, employees or other business contacts during the holiday season. They may be a deductible business expense.
This time of year is often associated with giving; and charitable contributions are a great last-minute tax deduction. If you make a donation via credit card in December, then it is deductible this year. Claim the deduction the year you make it, not when you pay the bill in January. If you are donating cash it is best to write a check to keep for your records, if you donate an item then you can donate the current fair market value. Remember you must have a receipt from the charity with the date, amount, and whether you received anything in exchange. High income taxpayers may have their itemized deductions limited.