If you are an employee without a business (even a part-time or weekends-only business), then your biggest and first expense is taxes. You pay for your expenses with after-tax money. It’s possible to find some itemized deductions such as mortgage interest, property tax, charitable deductions, and the like. In fact, my web site, www.taxloopholes.com, lists the most common itemized deductions with loopholes hints to utilize those each year during tax season. As your income climbs, however, your itemized deductions phase out. (You take them but later have to add them back.) You’ll also see that you lose the ability to benefit from exemptions for yourself, your spouse, and your dependents. And, the scariest news of all, the Alternative Minimum Tax (AMT) will begin to affect millions more Americans as in-comes rise with inflation. Itemized deductions will be the main reason most people become affected by this alternative form of tax. Mortgage interest and state taxes are not fully deductible when calculating AMT.
