Tax time is quickly approaching, and it’s important to get your paperwork in order long before the April 15th deadline. Make sure that you have all the receipts you need in one place now so that you aren’t scrambling to find it when you are filling out the forms. Filling out the forms as accurately as possible will help you avoid being audited and it may even help you qualify for a refund.
Did you give or receive any large monetary gifts this year. Figuring out taxes on gifts can be confusing, so make sure that you save all receipts. You may have to file a gift tax return, but filing this form doesn’t always mean that you will owe tax on the money you gave.
Some types of medical expenses can be deducted on your taxes, so make sure you have all receipts for medical expenses with your tax return paperwork. Your qualifying medical expenses must add up to more than 7.5 percent of your income to be deducted. Qualifying medical expenses include things like Medicare premiums and out-of-pocket prescription costs. You cannot deduct any medical expenses that have been reimbursed by your insurance company.
Contributions to Charity
If you have donated to charity and not received any services or goods for your contribution, your donation is likely tax deductible. You can also write off the cost of goods that you have donated. Most charities will happily write you a receipt to include with your tax receipts and other paperwork.
Another items that is often overlooked at tax time is income from investments. Any earnings from stocks or bonds must be included in your income tax return. You may also be able to claim losses if your investments fared poorly this year. Keep any receipts you receive that are related to money and markets. A small gain or loss may not affect your taxes at all, but the information should still be included in your return.
Real Estate Income
Most homeowners remember to claim the amount they pay in mortgage interest on their tax return, but may forget that they can also deduct real estate taxes. Don’t forget to claim an exclusion for the income you made on the sale of your home. Your profit can be deducted unless it exceeds $500,000 for a couple or $250,000 for an individual.
Even people who don’t own their own businesses may be able to write off business expenses. You can claim mileage for any miles that you used your vehicle for business purposes. Each trip must be tracked on a log and you cannot write off your daily commute. You can write off the cost of relocating for a job and costs associated with job hunting. You can also deduct any housing expenses or other expenses if you worked out of town for a period.
Tax time can be confusing and stressful for a lot of people. Even if you have a professional working on your taxes, you’ll still need to remember to get them all the receipts and proof that they need to complete your return. Your accountant might not necessarily tell you everything you can write off, because they don’t know what you qualify for unless you provide them the documentation. Start getting your paperwork together early and make sure that everything is accounted for. This way you can maximize your tax return and make sure that you don’t receive any bills from the IRS later.