Standard Versus Itemized Deductions

• Most taxpayers can choose whether to itemize certain tax deductions or take the standard deduction, which is a simpler method. The standard deduction for 2010 is $5,700 if filing single and $11,400 if filing jointly with a spouse. You can itemize deductions such as mortgage interest, property taxes, medical expenses and charitable donations. If your total of these expenses is higher than your allowed standard deduction, you should itemize. However, you can take many deductions regardless of which method you use. These deductions from gross income result in a figure on the tax return called Adjusted Gross Income.
  
  

Retirement Plan Contributions

• You may deduct eligible contributions you made in the year to a traditional individual retirement account. A Roth IRA is ineligible for the deduction. Limits are imposed on how much you can contribute to a traditional IRA in the year, depending both on your filing status and your income. You can also deduct contributions to a SEP or SIMPLE plan. You cannot deduct employer-sponsored plan deductions such as a 401(k) as the tax has already been reduced to account for those payments.
  
  

Schooling Costs

• Two main types of costs related to higher education can generally be deducted: student loan interest and education costs. Qualified education costs include tuition to an eligible institution as well as required student fees, textbooks, resource material and equipment directly related to the course of study. You cannot claim any higher education expenses that were paid from grant or scholarship proceeds. Taxpayers who are married but filing separately and those who are claimed as a dependent on someone else's return are ineligible for the deduction. You may also deduct student loan interest that you pay in the year, up to $2,500 per year.
  
  

Other Expenses

• A variety of less common expenses are deductible even if you choose to take the standard deduction. You can deduct your moving expenses if you are starting a new job or business and are moving at least 50 miles closer to your new employer. Other deductions include educator expenses, health savings account contributions, self-employed health insurance deduction and alimony that you paid during the year.