Personal Finance 

Average Tax Deductions by Income

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Do you ever wonder how your tax return compares to the average? Although your motivation may be nothing more than curiosity, there’s another reason why knowing the deductions that others claim in your income bracket could be important. Blending in may help you to avoid an audit.

Each year the IRS publishes the average amount of deductions by income bracket and for those with a noticeably higher amount of deductions than the average for their income level, the IRS may want to know why. Avoiding an audit may start with how well you blend in with other tax payers.

According to USA Today, the average household income is $49,445 but they also report that this average has continued to fall putting more Americans in to the lower income brackets. What are the average deductions in your income bracket? We’ve included the deductions for the average tax payer and a few  others.

$15,000 to $30,000

  • Medical Expenses- $7,074
  • Taxes-$3,147
  • Interest- $9,245
  • Charitable Contributions- $2,024

$30,000 to $50,000

  • Medical Expenses- $6,153
  • Taxes-$3,830
  • Interest- $9,055
  • Charitable Contributions- $2,189

$50,000 to $100,000

  • Medical Expenses- $7,102
  • Taxes-$6,050
  • Interest- $10,659
  • Charitable Contributions- $2,693

$100,000 to $200,000

  • Medical Expenses- $9,269
  • Taxes-$10,798
  • Interest- $13,734
  • Charitable Contributions- $3,754

If you’re earning more than $200,000 or want to see the average deductions for the top 1% of earners, you can view the full chart by clicking here.

Blending In

Sometimes the IRS sends you an audit notice because of a random draw but often audits are a result of something that looks out of place on your return. If you’re completing your taxes without the help of a computer, first consider double checking your return with TurboTax or one of the other tax software packages but if you’re not, be careful with your math. Audit triggers are often the result of math errors.

Next, before submitting your return, look at how much in deductions you have in the above categories. The IRS pays particular attention to the charitable contributions category since it’s easy to exaggerate the value of donated items. If one donation exceeded $250, the IRS requires you to have a receipt. You can read more about the rules for charitable contributions here.

Include Legitimate Claims

It’s true that falling within the average deductions for your income group helps to shield you from an audit but some people have legitimate reasons to claim more than the average amount. If you have the necessary documentation to prove your deductions don’t pay more in taxes just to avoid being higher than the average. If you do find yourself outside the normal range, all income and deductions will need the appropriate documentation. The IRS will audit your entire return.

Bottom Line

Audits are only a problem for people who were less than truthful or incorrectly completed a portion of their return. Especially if your deductions are higher than the averages, have the appropriate documentation and if your return includes complicated items like a home office deduction, multiple businesses, complicated investments, or other special tax situations, it is best to find a qualified tax professional to help. Getting a second look at your return is cheap compared to the penalties and interest you could pay if you complete the forms incorrectly.

{ 12 comments, please add your thoughts now! }

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12 Responses to “Average Tax Deductions by Income”

  1. freeby50 says:

    These are not the averages for all tax filers. The figures are only the averages among the people who claim the deductions in question.

    Only about 1/3 of tax filers even itemize at all. So 2/3 of filers do not make any of these deductions. Only about 7% of filers claim medical deductions.

    So 93% of tax filers claim $0 for medical deductions and among the 7% of tax filers who do claim medical deductions their average deduction is $7900.

    • David M says:

      Excellent clarification – Thank you.

      I thought those medical expense number were awfully high!

  2. Jim says:

    Good point freeby50, these aren’t percentages for the collective population… that was probably unclear.

  3. Summer says:

    $9k in interest and 30k in income? Do these people have a half million in cash laying around or something?

    • Scott says:

      Interest DEDUCTION, not interest INCOME. They are PAYING (not earning) $9,000 in interest for the year to things like their mortgage and student loans.

  4. govenar says:

    Sounds like I need to get more medical problems and pay more interest to blend in.

  5. Anonymous says:

    Average is not the same as median…

  6. Jonathan Cryer says:

    Averages or medians only tell a small part of the story. We also need some idea of the spread in the distribution. Perhaps the midrange or standard deviation. Then we could assess where we stand relative to others.

  7. freeby50 says:

    I would guess that the people shown with income in the $15,000-$30,000 range and interest deduction averaging $9,245 is probably due to a bunch of people who were unemployed or otherwise had low income for the year in question. Or there could be some people who get social security which isn’t fully taxed. The income numbers are actually for Adjusted Gross Income and won’t reflect 100% of everyones total cash income.

  8. Yea these numbers really don’t seem like the median…I think there might be some major outliers skewing the numbers..

  9. Jerry Chin says:

    The IRS grades your tax return on a bell curve. For your income bracket, certain statistics like charitable donations, medical deductions, home office deductions, will throw you into either the main distribution, or further out on the curve in a standard deviation removed from the mean. No one knows exactly how the curve is shaped and where the “Audit” deviation begins. So the whole game of “let me try to get away with sliding under the IRS audit radar by playing with my numbers” is a futile game. The only way to sleep peacefully at night is always to keep your nose clean so when the audit comes, you know you have done nothing wrong.

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