“Tax Day is April 18th, 2016” (Not a typo!)
Historically, 20% of American’s wait until April to file their taxes. Some may be habitual procrastinators, while others may be waiting because they owe the Internal Revenue Service money. Either way, tax filers can thank Washington D.C. for celebrating Emancipation day on April 15th, 2016 instead of April 16th, which this year falls on a Saturday. Thus, a gift of three extra days to file your federal tax return. Three extra days to gather your numbers, visit your tax preparer, or push the button and electronically file from home. The regular tax return filing deadline has not permanently changed from the familiar April 15th, so don’t reset your filing schedule!
Another noteworthy “don’t” is don’t short change yourself by overlooking possible deductions like medical and dental out of pocket expenses, charitable donations, or state sales tax where applicable. Recent statistics indicate that fewer than 35 percent of American’s itemize on their tax returns and are possibly paying more taxes than necessary. Although these items may be easy to overlook, the IRS actually has a calculator to help you figure out the deduction. Some of the more popular deductions for itemization include, but are not limited to:
- Medical and Dental – you may be able to deduct expenses you paid last year for medical and dental care for yourself, your spouse, and your dependents. You may deduct only the amount of your total medical expenses that exceed 10% of your adjusted gross income or 7.5% if you or your spouse is 65 or older. Adjusted Gross Income is defined as gross income minus adjustments to income.
- State sales tax – If you live in a state that does not impose a state income tax, then this deduction makes sense for you. The IRS has tables for states with sales tax showing how much you can deduct. If you made any large purchases last year such as a boat, a new car, or even home building materials you can itemize the sales tax. To be deductible, the tax must be imposed on you and you must have paid it during the actual tax year.
- Charitable contributions – contributions and donations made to qualified charitable organizations, but again, only if you itemize. For donations including merchandise, goods, or services, including admission to a theatrical performance or sporting event you can only deduct the amount that exceeds the fair market value of the benefit received.
- Work-related education expenses – You may be able to deduct work-related education expenses paid during the year as an itemized deduction if your expenses are for education that maintains or improves your job skills or that your employer or a law requires to keep your salary, status, or job. These expenses must again be itemized on a Form 1040, Schedule A.
The IRS has a robust list of Tax Topics related to itemization and deductions on their website with helpful tips and calculators. Additionally, popular tax return online tools have incorporated itemization into their electronic filing processes including step-by-step guidelines.
If three extra days still isn’t enough time to get everything added up and submitted, the deadline to file an extension of time to file your individual tax return is also April 18th, 2016! (Again, not a typo)
Filers on your mark, get ready, get set, and FILE!
-By Susan Amsler
April 8, 2016
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