You're Giving Your Money to the Government: Top Tax Deductions for Individuals

The stub of your paycheck clearly tells you how much of your hard earned dollars are diverted to the government. Feel free to shake your head in frustration but don't just shirk your shoulders and forget about it until the next pay period. Millions of Americans are leaving money on the table every year by not doing adequate tax planning.

Taxes have been typically done in a historic fashion. The year rolls by and our taxes are filed based on what happened the previous year. We can impact this outcome greatly by planning and implementing throughout the year.

1. Start by getting yourself an accordion file and get organized. We're innocent until proven guilty in the court system. Take the opposite stance with your taxes and provide proof for everything.
2. Contribute to your employer's qualified retirement plan. The contributions go in on a pretax basis, which reduces your taxable income for the given year. In addition, most employers offer some form of a match, which is in essence, free money for your retirement.
3. Even if both spouses aren't working outside the home, you should consider a Spousal IRA. The theory of the Spousal IRA from a tax standpoint is the same as contributing to your employer's qualified retirement plan. A nonworking spouse can contribute up to $4,000 for 2007 ($5,000 if over age 50.) There are phase-out income limits for these beginning at $83,000, so you should consult your tax advisor.
4. Make no assumptions when it comes to deducting Medical Expenses on Schedule A. Many people never keep their receipts because they assume they won't spend over 7.5% of their adjusted gross income on medical. It's amazing how quickly things add up and how many things we can deduct that we don't. Save all your receipts so that you're not shorting yourself.
The following is a list of things that can be deductible and are often overlooked: contact lenses, saline solution, prescription medications, prescription co-pays, office visit co-pays and even mileage to and from the doctor.
5. Learn what the acronyms FSA and HSA mean if you don't exceed 7.5you're your AGI on medical expenses. The Flexible Savings Account and Health Savings Account do have some central differences. What they do have in common, however, is the money you put into these accounts is done so on a pretax basis.
This money is then used to pay for medical expenses. Depending

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