Other than keeping track of your income, mileage and your expenses there is something else you can do now to help you with next year’s tax appointment. Find overlooked tax deductions.
The goal is to keep your hard earned money in your pocket if at all possible. Now saying this, everyone’s financial picture is different and it is best to consult with a tax professional before making any final decisions.
Colonial Life reports that “In recent years, 45 million Americans claimed $1.2 trillion of itemized tax deductions.” That is $26,666.67 annually.
Commonly overlooked tax deductions are:
- IRA contributions – Depending on your tax bracket, making IRA contributions make sense and could save you a few thousand dollars.
- Tax credits – 25% of eligible taxpayers don’t claim this credit and could save you money come tax time.
- College savings – If you don’t claim the child as a dependent, they can qualify for tup to a $2500 deduction for the interest you pain on the student loan through the American Opportunity Credit.
- Home improvements – Normally home improvements are not tax deductible in the year they are created but can be added to the cost-basis of the home when you sell it.
- Job hunting costs – Itemize transportation, food and lodging, employment agency fees and printing costs for resumes, postage and business cards if your expenses are greater than 2% of your adjusted gross income (AGI).
- Use your Health Saving account, which is a pre-tax contribution that goes into a separate account for current and future health expenses.
- Keep track of and keep receipts, pictures and lists for charitable donations.
- Track moving expenses.
- Watch mortgage refinancing points.
- Make energy-efficient home improvements whenever possible.
It should be your goal to keep as much of your own money as you can, as you earned it. Your tax professional is trained to make sure you benefit the most.