The end of the year is quickly approaching and if you want to hold onto as much of your hard earned money as possible, that means it’s time to plan for taxes. Most of us think of Tax as a four letter word even if we can read! It is painful to see the government pulling so much out of a working man’s pocket but how many of us are pulling the cash out of our pockets and handing it over to the government ourselves? You may think that you don’t fall into this category but you may be surprised. In this post we’ll cover several ways that you can save money on taxes that usually go overlooked.
Donate to charities
Many people who are stingy with their money actually find that their taxes are more in the end. You have a choice of either giving your “donations” to the government or an actual cause that you believe in. This donation can be a number of different causes whether it is universities, churches, or non-profit organizations. You can actually donate clothing, household items and other property for tax deductions with cooperating organizations. Remember that these items need to be in good condition in order to be seen as tax deductible.
Offset gains against losses
There are many ways to show that you have had a loss, even if you made a profit in that year. What you have to consider is the depreciation of the things that you own whether it is stocks or equipment (if you are a business owner).
Start your retirement plan
All contributions that you make to a retirement account, as long as you are eligible, can be deducted from taxes. You have to be an active participant, or if you are married than your spouse needs to be an active participant. The way that this is done is by looking at the modified adjusted gross income where they can decide how much of a deduction you are eligible for. You may be able to deduct up to $49,000.
Make sure that the IRS has the right address
There are thousands of refund checks sent to bad addresses each year. If you don’t get your refund check you may also be missing out on crucial information about tax deductions that the IRS may suggest for you.
Flexible Spending Account
This is a benefit that some employers offer where they take some of an employees pay before taxes and send it to an account where it can be used for all kinds of benefits by the employee. So not only will you pay less taxes but they are there ready to be used when you need to make a claim. These are used for dependent care and healthcare as well.
If you found yourself spending money to find work or you in-between jobs for a period of time. You may be eligible to deduct some of those expenses if they happened while looking for a job in a new occupation.
Home computer and cell phones
If you use your computer to produce income then you can deduct the depreciation of your home computer. This same principle applies to cell phone use if it was for work.
The IRS looks at all of your medical expenses and understands that your insurance may not cover all of that. You can actually write off all of your travel to and from the doctor’s office or any other travel expenses incurred from medical.
Keep track of it all
So, all of those receipts that you are throwing away could turn into money in your pocket later on. Make sure you are keeping track of things and that you have a record of even the smallest expenses you have. Here are some ways to organize and file your paperwork so taxes are a little bit easier to do in the end.
- Make sure you have both your social security card and all of your dependents’ as well. If you don’t it will delay the process of receiving a return.
- Keep track of all of your W-2 forms so you can know your income totals.
- You also need to track your earnings from other assets. This can be savings or other interest earning activities. These need to be documented and sent in as well.
- Start doing some pre-filing by understanding some of the costs associated with your home. Mortgage interest is tax deductible.
- Keep track of your real estate taxes so you can put those done as tax deductible. This goes for people who don’t own homes as well. If you have to pay taxes on a car you can put that down as well.
Make sure that everything is in an order so that you can back up every claim that you make.