Tax Tricks You Should Know for the Upcoming Season
Taxpayers who lament receiving small refund checks every year may not be doing all they can in terms of smart tax planning. While you can’t control what the IRS does, you can, in many cases, control the size of your next tax refund check.
So, how do you go about it? Paying attention to the following income tax planning tricks may very well make the difference in getting you a fatter check.
Optimize Your IRA Contributions
Taxpayers have until April 15th to open and fund an IRA account for the previous tax year. This is a good deal because it provides taxpayers with the flexibility of claiming the IRA credit after the fact.
The best part of this deal is it gives you the opportunity to file early and use monies from your income tax refund check to fully or partially open and fund your new IRA account.
Selling a Home Unlocks Tax Breaks
If you have sold a home during the previous tax year, certain costs including title insurance, marketing and advertising, real estate brokerage commissions, and fees are, in part, recoverable as tax deductions. All you need to do is claim them properly on your tax return. The key to benefiting from this tip is in learning the complex IRS rules surrounding this type of deduction.
Most homeowners are already aware they can claim a deduction on their Schedule A for real estate property taxes and interest paid on mortgages and home loans. Few, are fully aware of the rules that permit them to claim deductions for home repairs made on a property before the date of sale.
Claiming these repairs as deductions has the effect of reducing the capital gains yielded from the sale of the property. Use a FHA mortgage calculator and other online tools like tax charts to see if you can make adjustments that will pay off in your taxes.
Job-Hunting Costs
Folks who have suffered long spells of unemployment are capable of running up an impressive list of job-hunting expenses. The good news is many of these miscellaneous expenses constitute legitimate IRS deductions and can be written off. The bad news is that it is you bear the burden of keeping track of these expenses.
Check for FSA
New medical insurance accounts like medical flexible spending accounts are new benefits being offered by many employers today. If you haven’t already, see if you might have a chance to sign up and use one, if your work offers it.
These accounts all you to put pretax out-of-pocket money into your medical insurance and use it how and when you like. You can then use this money forever, across the years. This means it is tax-free and can be utilized whenever.
It’s an easier way to keep track of and pay for medical expense and will be good to use whenever. Don’t forget to ask work about this benefit to see if you are eligible. It could save you a lot of trouble on this year’s taxes.
Tax planning is the process of using all available tax knowledge you can to reduce the taxable income you are obligated to report. The smaller your tax bill, the less you need to pay in taxes. This will get you the bigger tax refund check you crave. In the rush to get tax returns filed on time, it can be easy to overlook all of the available avenues you can take to reduce a tax bill. Good tax planning begins with allocating the proper amount of time to do this job right.
Category: Taxes
