Itemization Limits
Just wrapping up our taxes here and seeing if anyone is aware of itemization limits in relation to ones gross income or AGI?
We showed 75k in w2 income and 12k in self-employment. After all our deductions (mortgage, medical, business, kids, IRA, etc) we are itemizing 28k in deductions. I want to avoid an audit at all costs. I just don't remember my deductions to income rate to be so high. Currently this is around 30%. Thanks. FWIW, I've always done our own taxes. Our relationship of deductions to income has normally been closer to 20%. |
Originally Posted by Fourpaw
(Post 2571498)
Just wrapping up our taxes here and seeing if anyone is aware of itemization limits in relation to ones gross income or AGI?
We showed 75k in w2 income and 12k in self-employment. After all our deductions (mortgage, medical, business, kids, IRA, etc) we are itemizing 28k in deductions. I want to avoid an audit at all costs. I just don't remember my deductions to income rate to be so high. Currently this is around 30%. Thanks. FWIW, I've always done our own taxes. Our relationship of deductions to income has normally been closer to 20%. This % alone is not an issue. I’ve even seen cases with 50% not get audited. Also, for tax purposes the deductions are not all treated the same. Itemized deductions (Schedule A) is evaluated separately than business and retirement contributions. |
After writing this, I went through my last 5ish years of tax returns and found anywhere from 20-42% in deductions to income ratios.
I guess I just have never paid attention to this number. For whatever reason this year it seemed to stand out. |
Originally Posted by Fourpaw
(Post 2571839)
After writing this, I went through my last 5ish years of tax returns and found anywhere from 20-42% in deductions to income ratios.
I guess I just have never paid attention to this number. For whatever reason this year it seemed to stand out. |
Originally Posted by Fourpaw
(Post 2571498)
Just wrapping up our taxes here and seeing if anyone is aware of itemization limits in relation to ones gross income or AGI?
We showed 75k in w2 income and 12k in self-employment. After all our deductions (mortgage, medical, business, kids, IRA, etc) we are itemizing 28k in deductions. I want to avoid an audit at all costs. I just don't remember my deductions to income rate to be so high. Currently this is around 30%. Thanks. FWIW, I've always done our own taxes. Our relationship of deductions to income has normally been closer to 20%. Is this because of a general fear of an audit? Or are you worried what they will find? I have been audited by the IRS and it was painless. They wanted to see proof of my expenses/deductions. The meeting took about an hour, I showed them my receipts, and that was it. If you are hiding something, it will not be so pleasant. |
Originally Posted by navigatro
(Post 2576730)
Is this because of a general fear of an audit?
Or are you worried what they will find? I have been audited by the IRS and it was painless. They wanted to see proof of my expenses/deductions. The meeting took about an hour, I showed them my receipts, and that was it. If you are hiding something, it will not be so pleasant. We just seem to have more and more deductions each year and I want to make sure we are within the realm of acceptable per IRS standards. |
Originally Posted by Fourpaw
(Post 2582259)
No not worried about an audit at all, as I keep receipts and records of everything (probably too much). I keep mileage logs for cars, and so on.
We just seem to have more and more deductions each year and I want to make sure we are within the realm of acceptable per IRS standards. who cares what the % is. acceptable is not a %, it is either allowed or not. if it is deductible then deduct it. If it triggers an audit, then so be it. |
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