| With tax time here, now is the time to consider how | | | | prove the purchases for the doctor visit, charitable |
| you want to claim -- the standard deduction or file an | | | | donations and business expenses; the IRS considers a |
| itemized income tax return. Why should you do this? | | | | canceled check or credit card/debit card receipt to be |
| It’s simple. Often overlooked deductions can | | | | appropriate for purposes of record-keeping. |
| make a HUGE difference in lowering your tax bill if you | | | | 6. Other itemized deductions: Florida doesn’t have |
| decide to itemize. | | | | an income tax, so for the year 2009 Form 1040, you |
| The standard deductions are fine for those who have | | | | may deduct sales taxes you pay. You can either |
| an uncomplicated tax situation. But the amount of | | | | use your actual sales taxes paid or use the IRS |
| your mortgage interest payments, state taxes, | | | | table. If you don’t itemize, and use the IRS table, |
| property taxes, charitable contributions and hurricane | | | | then you can also deduct the sales tax you paid on big |
| losses, if any, could be more than the standard | | | | ticket items such as Cars, Furniture household items |
| deduction that is given. What does this mean? If you | | | | like a new kitchen. Also, if you are a teacher, you |
| do not itemize, you may not save as much as you are | | | | may deduct up $250 for any school supplies you |
| entitled to. With this in mind, you should take a look | | | | purchase. This year the energy tax credit has been |
| over the following list of often missed credits and | | | | extended, so if you purchased a new water heater, |
| reductions before you start the process of completing | | | | air conditioner, solar device, or impact windows, you |
| your 2009 tax return: | | | | might be entitled to a $1500 tax credit |
| 1. Education Expenses: There are many education | | | | 7. Capital Losses: With the market downturn in 2009, |
| related deductions and credits available to you if you | | | | you can deduct up to $3000 in NET losses on |
| are making tuition payments, paying off your college | | | | investments. Any losses in excess of that may be |
| degree or student loan interest or just saving for your | | | | carried over to 2010. |
| child’s education. You then owe it to yourself to | | | | 8. Earned Income Credit: Those taxpayers whose |
| check out the explanation of education tax benefits | | | | income is below a certain level and who have |
| available on the IRS website. | | | | dependents may also qualify for additional tax credits. |
| 2. Deductions for Home Office: Are you self | | | | If the credit results in a refund, the IRS will mail it to you. |
| employed? Is your home office your principal place of | | | | 9. Education and Child Care Credits: Depending on your |
| work? Is your gross income more than your related | | | | circumstances, you may be eligible for tuition payments |
| deductions? You should then be able to claim this | | | | for your dependents’ college expenses. For |
| deduction. Are you employed by a company? If so | | | | those of you who have children in daycare, there is |
| you can deduct the home office ONLY if it is for your | | | | also a credit for the amount you pay to your daycare |
| employer’s convenience. You MUST also pass | | | | provider. You MUST have a receipt from the |
| the “exclusive use” rule to qualify for deducting | | | | provider listing their name, address, amount you paid |
| a portion of your home’s expenses, including | | | | and their Tax Identification Number. |
| mortgage interest, real estate taxes or rent, utilities, | | | | 10. Medical deductions: Be sure to include your |
| property maintenance (mowing, snow removal) or | | | | payments for medical insurance if you receive |
| even repairs. Caution, this is a RED HOT issue for | | | | Medicare. You may also be able to deduct medical |
| the IRS so be certain you pass the “exclusive use | | | | insurance premiums, co-pays, other out of pocket |
| rule”. If you don’t have an office in your home, | | | | expenses, hospital, doctor, dentists and any other |
| you may still deduct your mortgage interest and real | | | | medical visits. Remember that there is a 7 ½% |
| estate taxes on both your main residence and any | | | | take away before you can itemize. |
| second home. | | | | 11. LASTLY: Be sure to include ALL your W’2’s, |
| 3. Deductions for Charity: You can deduct all that you | | | | Form 1099’sand any other documents which report |
| have given to charity, especially if you have given cash | | | | income to you, such as bank or brokerage |
| gifts, or in-kind donations of clothing, toiletries, food or | | | | statements. |
| appliances that you can then deduct at fair market | | | | Tax Deduction Checklist |
| value. You should go through your receipts and your | | | | The best tax deductions checklists are found in three |
| credit card statements to make sure you don’t | | | | places: |
| forget all that you have given. Only donations to 501 | | | | 1. Your past years' tax returns 2) With your tax |
| (c)3 organizations qualify. If you donate items other | | | | professional 3) Through an online tax website |
| than cash and the amount is over $500, you must | | | | The IRS website provides plenty of useful information |
| have a receipt from the organization who received | | | | on tax filing which could end up saving you a lot of |
| your donation. Also remember that the IRS will want | | | | money on this year’s tax return. Take a few |
| to see proof of cash donations, such as checks, stubs | | | | minutes to go over all the information you have on |
| or statements from the charity. | | | | taxes so you can save yourself the most in the end. |
| 4. Miscellaneous Expenses: Did you know that | | | | CHOOSE YOUR TAX FILING METHOD! You may |
| gambling losses, job search expenses, safe deposit | | | | wish to hire a tax professional if you have had any |
| fees, subscription to investment publications and even | | | | major changes to your income such as an inheritance, |
| tax return preparation expenses could be claimed as | | | | lottery winnings, an investment windfall, or the like, or |
| tax deductions? Also, unreimbursed business | | | | simply feel overwhelmed at the thought of the task. |
| expenses may be eligible to be claimed as a | | | | On the other hand, if your goal is to prepare your own |
| deduction. Your total miscellaneous expenses, | | | | tax return, there are great software programs for help |
| however, must exceed 2% of your adjusted gross | | | | with tax preparation, such as TurboTax, Quicken, or |
| income to qualify. | | | | TaxAct. These programs are inexpensive and will |
| 5. Don't pay in cash: Cash may be convenient but it's | | | | walk you through your tax return with a series of |
| also practically guaranteed to be forgotten come tax | | | | questions that make it a relatively painless process. |
| time, unless you're one of those folks who's great at | | | | INFORMATION PROVIDED ABOVE MAY NOT BE |
| writing down every single purchase. In some cases, if | | | | OF USE TO YOU AND THEREFORE YOU SHOULD |
| you do not get a receipt when you pay in cash, you | | | | CONSULT A TAX PROFESSIONAL CONCERNING |
| will be unable to make a deduction. When you can, | | | | YOUR ELIGIBILTY TO USE A DEDUCTION. |
| write out a check or use your debit card so you can | | | | EVERY PERSON’S SITUATION IS UNIQUE. |