Let’s Talk Taxes

FinanceTax

  • Author Stu Lieberman
  • Published April 9, 2010
  • Word count 758

With tax time here, now is the time to consider how you want to claim -- the standard deduction or file an itemized income tax return. Why should you do this? It’s simple. Often overlooked deductions can make a HUGE difference in lowering your tax bill if you decide to itemize.

The standard deductions are fine for those who have an uncomplicated tax situation. But the amount of your mortgage interest payments, state taxes, property taxes, charitable contributions and hurricane losses, if any, could be more than the standard deduction that is given. What does this mean? If you do not itemize, you may not save as much as you are entitled to. With this in mind, you should take a look over the following list of often missed credits and reductions before you start the process of completing your 2009 tax return:

  1. Education Expenses: There are many education related deductions and credits available to you if you are making tuition payments, paying off your college degree or student loan interest or just saving for your child’s education. You then owe it to yourself to check out the explanation of education tax benefits available on the IRS website. http://www.irs.gov

  2. Deductions for Home Office: Are you self employed? Is your home office your principal place of work? Is your gross income more than your related deductions? You should then be able to claim this deduction. Are you employed by a company? If so you can deduct the home office ONLY if it is for your employer’s convenience. taxes You MUST also pass the "exclusive use" rule to qualify for deducting a portion of your home’s expenses, including mortgage interest, real estate taxes or rent, utilities, property maintenance (mowing, snow removal) or even repairs. Caution, this is a RED HOT issue for the IRS so be certain you pass the "exclusive use rule". If you don’t have an office in your home, you may still deduct your mortgage interest and real estate taxes on both your main residence and any second home.

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  1. Deductions for Charity: You can deduct all that you have given to charity, especially if you have given cash gifts, or in-kind donations of clothing, toiletries, food or appliances that you can then deduct at fair market value. You should go through your receipts and your credit card statements to make sure you don’t forget all that you have given. Only donations to 501 (c)3 organizations qualify. If you donate items other than cash and the amount is over $500, you must have a receipt from the organization who received your donation. Also remember that the IRS will want to see proof of cash donations, such as checks, stubs or statements from the charity.

  2. Miscellaneous Expenses: Did you know that gambling losses, job search expenses, safe deposit fees, subscription to investment publications and even tax return preparation expenses could be claimed as tax deductions? Also, unreimbursed business expenses may be eligible to be claimed as a deduction. Your total miscellaneous expenses, however, must exceed 2 take away before you can itemize.

  3. LASTLY: Be sure to include ALL your W’2’s, Form 1099’sand any other documents which report income to you, such as bank or brokerage statements.

Tax Deduction Checklist

The best tax deductions checklists are found in three places:

  1. Your past years' tax returns 2) With your tax professional 3) Through an online tax website

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The IRS website provides plenty of useful information on tax filing which could end up saving you a lot of money on this year’s tax return. Take a few minutes to go over all the information you have on taxes so you can save yourself the most in the end.2010 tax return

CHOOSE YOUR TAX FILING METHOD! You may wish to hire a tax professional if you have had any major changes to your income such as an inheritance, lottery winnings, an investment windfall, or the like, or simply feel overwhelmed at the thought of the task. On the other hand, if your goal is to prepare your own tax return, there are great software programs for help with tax preparation, such as TurboTax, Quicken, or TaxAct. These programs are inexpensive and will walk you through your tax return with a series of questions that make it a relatively painless process.

INFORMATION PROVIDED ABOVE MAY NOT BE OF USE TO YOU AND THEREFORE YOU SHOULD CONSULT A TAX PROFESSIONAL CONCERNING YOUR ELIGIBILTY TO USE A DEDUCTION. EVERY PERSON’S SITUATION IS UNIQUE.

Stu Lieberman has been in the Credit Counseling and Debt Consolidation business for over 14 yrs writing articles and information for several sites.

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