Taxpayers who stand out tend to draw the attention of Internal Revenue Service auditors. Claim too much in interest, health expenses or charitable deductions, and it's like waving that proverbial red flag in front of the tax man.
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The agency knows, to the dollar, how much people at your income level typically write off for these categories. When you claim a higher-than-average amount, it doesn't necessarily mean that you're cheating, but it raises questions. You could be claiming a much higher medical deduction because your family had a horrible year, healthwise. And that over-the-top charitable write-off could just signify your extreme generosity.
But it might also signal that you're not claiming enough income to cover the vast amount you say you're paying in deductible expenses, so a really out-of-whack Schedule A (where deductions are claimed) can cause problems.
None of that has stopped Americans from making the most of their deductions, according to CCH, a tax research firm. In 2007, the last year for which these statistics are available, the average return claimed $26,268 in itemized deductions, up 4.5 percent from 2006. For example, returns claiming between $50,000 and $100,000 in income claimed, on average, $7,102 in medical expenses; $6,050 in state and local taxes; $10,659 in interest and $2,693 in charitable deductions, according to the firm, which crunched IRS data to compile these figures.
Being way above average doesn't mean you should leave cash on the table, it just means that you should be extra careful about documenting the deductions and income that you have. And if you're way under average, you might go back over your credit card statements and checking account records to make sure you're not forgetting items you should be claiming. Check out the table below to see what 2007 deductions looked like in your tax bracket.
|Average Itemized Deductions|
|Adjusted Gross Income||Medical Expenses||Taxes||Interest||Charitable |
|$15,000 to $30,000||$7,074||$3,147||$9,245||$2,189|
|$30,000 to $50,000||$6,153||$3,830||$9,055||$2,189|
|$50,000 to $100,000||$7,102||$6,050||$10,659||$2,693|
|$100,000 to $200,000||$9,269||$10,798||$13,734||$3,757|
|$200,000 to $250,000||$21,554||$18,164||$18,570||$5,895|
|$250,000 or more||$37,143||$50,267||$27,865||$20,930|
|*Source: CCH, 2011|