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CHAPTER 10

standard deduction and itemizing to see which way suits your situa- tion the best.

There is often some confusion about what can be written off and what can’t. Here’s a list of some of the more common items that can be written off:

  • medical and dental expenses (in excess of 7.5 percent of adjusted gross income)

  • state, local, and foreign income and property taxes

  • state and local personal property taxes

  • residential mortgage interest and investment interest (limited amounts)

  • charitable contributions (limited to 50, 30, or 20 percent of AGI depending on certain aspects)

  • casualty and theft losses (reduced by $100 per loss and in excess of 10 percent of AGI)

  • job and other expenses (in excess of 2 percent of AGI)

  • moving expenses (subject to some limitations) There are also many other potential deductions that are often

overlooked:

  • fees for tax preparation services and IRS audits

  • financial planner fees

  • cellular telephones and charges if certain requirements are met

  • contact lenses

  • amortization of taxable bond premiums

  • appreciation on property donated to charities

  • commissions on property sales

  • depreciation of home computers if certain requirements are met

  • fees for safe-deposit boxes

As I mentioned previously, the IRS phases out and limits other- wise available deductions for personal and dependency exemptions, as well as certain itemized deductions for people in higher tax brack- ets. Those individuals whose AGI exceeds a certain amount ($137,300 for 2002) will begin to have their itemized deductions lim- ited, or phased out. That income threshold is the same whether you

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