I have two W2s and I was unemployed for 6 months in 2008. I am single and I rent. I work as an IT consultant and I had to buy my own medical insurance etc I have been working from home & using my internet & phone for my project, even though I got paid on a W2. Can I deduct my medical insurance premiums & job search expenses if I itemize? If I total my charity contributions for which I have receipts and job search expenses plus mileage travelling to client’s office I think it’ll all come down close to 7000. My total income is 47,000 for the year. Or shud I just take standard deduction.
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You should do whatever gives you the higher deduction, but you can only deduct medical expenses that are over 7.5% of your income, so much of those insurance premiums won’t be deductible. And the use of your phone and internet for the project doesn’t mean it’s ALL deductible, just the part of the Internet cost that’s business use. If the phone is your only line, it isn’t deductible at all. And business expenses that are for a job as an employee, with a W-2, are only deductible for the part that’s over 2% of your AGI. With 2 W-2′s, especially if you got unemployment for the 6 months, it’s pretty likely that your allowable deductions will be under the standard deduction of $5450. But calculate what your deductions would be.
Your question is a little confusing – you say you work as an IT consultant, but say you got W-2′s. If you work as an employee of a consulting company, Suzan’s answer has a number of things that aren’t correct.
No you should not just take the standard deduction. From the information you provided, you had a home office plus you incurred expenses to earn the money. Your home office is a valuable deduction. Your medical insurance is deductible on the front of the 1040 as an adjustment to your income if you did not have a loss. You should have Sch A, and a Sch C based on just the information you gave. Please contact me, I can do your taxes or I can look them over for you after you have prepared them and before you your file your return. Contact me at my website;www.alisuzan.com. I am a tax accountant, you are entitled to pay only your fair share of taxes and not a penny more. That is written in the law.
Use Turbo tax and they will tell you which one is better for you to the dollar. Rough guess is that itemizing will be better.