Most taxpayers are honest

The vast majority of American taxpayers are honest when it comes to filing and paying their taxes. The huge tax cheats are rare. Instead of taking advantage of the system, it is actually the opposite that is true; most Americans do not take advantage of legitimate deductions and overpay on their taxes. The IRS reports that taxpayers usually make the same mistakes every year. The number one mistake on returns every year is forgetting to include a social security number on the return. Luckily, this will only cost the taxpayer time and not money.

Convenience can be costly

Approximately 85 million taxpayers choose to take standard deductions as opposed to itemizing their tax returns. Only 46 million people itemize their returns. The smaller group of taxpayers actually claims twice the amount of deductions as the larger group. Itemized deductions account for a trillion dollars of deductions while standard deductions account for a cheeky half trillion. Only legitimate deductions are included in the figures from the IRS, so itemizers aren’t cheating. Most people admit to filing only the standard form out of convenience and lack of documentation. This convenience and lack of proper record keeping could be costing some taxpayers to pay four times their rightful tax obligation.

State sales tax most overlooked

Everyone is entitled to claim state sales tax they paid during the course of a tax year. The IRS has tables that show how much can be deducted, depending on the state you live in and your income. The biggest advantage for people living in those states without an income tax, but everyone can benefit from this deduction. Also, there are items that can give a taxpayer a bigger deduction that what tables will show you. For instance, the sales tax from the purchase of a car, boat or airplane can be added into the amount in the table. State sales tax on home building supplies are also deductible.

Giving could get you a deduction

Most tax payers already take the appropriate deductions for contributing to charitable organizations in the form of money. Taxpayers deduct money they contributed to religious groups, homeless shelters, etc. However, most taxpayers overlook the out-of-pocket deductions available for doing good works. For instance, a cake baked for a church fundraiser is a charitable contribution, and thus the cost of ingredients is deductible. The taxpayer can also claim 14 cents per mile for delivering the item.

Children benefit from Mom and Dad’s help

Interest paid is a common deduction. Most people know to deduct interest paid on student loans and mortgages. College students and graduates, that aren’t claimed as dependents, can benefit from help from the parentals. The IRS treats interest paid on a student loan by a parent as money given to the student who then paid the debt. As long as the child isn’t claimed as a dependent, the child deduct the interest on their return.