Commonly overlooked tax deductions
It is that time of year again – the time to pay your taxes. No one likes to pay taxes and a great accountant will make sure you don’t forget about these commonly overlooked tax deductions as your return is prepared.
First, congress offers itemizers the choice between deducting the state income tax, or the state sales taxes they paid. If you live in a state without an income tax, such as Tennessee, deducting your sales tax is a great way to reduce your tax debt owed. If you invest in mutual funds, be sure to account for reinvested dividends. Forgetting to include reinvested dividends in your basis results in double taxation, once in the year they were reinvested in, and later when they are included in the proceeds of a sale. Don’t forget personal property taxes, real estate property taxes paid during the year, and medical premiums paid if you are self-employed.
Be sure to depreciate all business equipment, including home computers that you perform work on. Even chargers and computer cord expenses add up to decrease your total tax owed. Education expenses can be deducted, particularly if required by law or by the employer to maintain or improve skills. Licensed professionals, such as barbers, are required to complete continuing education each year. Be sure to write those expenses off. Subscriptions to professional journals are also deductible. If you have a job change this year, costs associated with looking for the new job can be deducted. This includes resume preparation fees, travel expenses and the cost of any outplacement agencies.
Mileage is one of the most commonly under-reported deductions on returns. Keep a log throughout the year detailing the date, mileage and purpose of the business trip. Every trip to Staples for office supplies and trip to the post office for stamps should be documented and accounted for.
Of course you can write off the big charitable gifts you made during the year, but out-of-pocket expenses that you incur while doing charitable works also add up. Expenses such as buying the stamps to mail the non-profit mailer, buying ingredients for the bake sale at school, and mileage for these events can all be deducted.
Rely on the experienced staff at Randolph Business Resources to get you the maximum amounts of credits available, and the most deductions possible. You can then pay your fair share of taxes, confident that you are not over-paying.