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It’s OK to be ‘average’: Keep deductions in IRS comfort zone

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in Small Business Tax,Small Business Tax Deduction Strategies

Being “average” is OK, especially when it comes to tax deductions. Reason: If you’re claiming unusually high deductions for someone in your income category, the IRS computers may spit out your name. It might even lead to an audit.

On the other hand, you don’t have to back away from deducting perfectly legit expenses on your tax return. But you should be ready, willing and able to substantiate those deductions if you’re way above the national averages.

Where do you stand? The IRS just released data for 2005 returns in its Statistics of Income Bulletin. (IRS News Release IR- 2007-55)

Tip: Note that these averages only take into account taxpayers who claimed the specific deductions on their returns. For instance, only about 5 percent of taxpayers qualified for medical expense deductions in 2005.

Adjusted Gross Income (AGI)
Charitable donations
Medical expenses
$15,000 - $30,000
$ 1,916 $ 2,783 $ 7,292
$ 6,515
$30,000 - $50,000
$ 2,158 $ 3,623
$ 7,582
$ 5,625
$50,000 - $100,000
$ 2,703 $ 5,812
$ 8,946
$ 6,144
$100,000 - $200,000
$ 4,057 $10,504
$ 9,727
$200,000 and up
$20,434 $39,321

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