Posted on | March 30, 2011 | 3 Comments
You need to know what deductions may be possible even when you hire someone else to do your taxes. A quick look over the tax codes on the IRS.gov website will help you determine all of the deductions you need to be considering.
Top Deductions that are Missed
1. Expenses that are NOT reimbursable by the company. Any expenses that are incurred during the tax year and that are considered ordinary and necessary for your industry can be used as a deduction on your taxes (at least a portion).
a. Depreciation on work computers
b. Dues paid to professional societies
c. Chamber of commerce membership
d. License fees for your business or occupation
e. Tools and supplies used in work
f. Work related education
g. Union dues or other related expenses
2. Most people overlook the potential of the deducting expenses associated with working at home. The Business Use of Home deduction can be applicable when your home is your principle place of business or when the space is used EXCLUSIVELY for business purposes. A portion of home expenses can be deducted when these criteria are met. The amount deductible will be determined by the percentage of home space used for business purposes.
a. Real estate taxes
b. Deductible mortgage interest
3. Mileage on a vehicle can be deducted for a number of different reasons. The amount that is allowed will be determined by the activities, but the numbers can add up to substantial savings. Be sure to keep a written record of all mileage you intend to claim on your taxes.
a. Business mileage – keep up with the trips you take for meetings, events or supply runs. Any time that you use your vehicle for business related purposes you can add that mileage to your totals. The business mileage has the highest allotment by the IRS.
b. Charitable mileage would be those miles you put on your vehicle when driving in the service of a charitable organization.
c. Medical mileage would be those miles put on the vehicle when visiting the doctor, dentist or other medical specialist.
4. Casualty, disaster and theft losses may be overlooked by many people when it comes to taxes. The amounts you can claim on your taxes are only those above any payments made by insurance companies. You will along be able to claim a portion of those totals. These loses are generally deductible for the year they occurred. Property located in a federally declared disaster area may meet different guidelines.
Knowing all that you can about the tax code will help you find even little deductions that you might be missing. A tax professional can make it easier to weed through all of the tax code. Some of the deductions seem little until you begin to add them all up. Counting a penny here and a penny there will help you save big money in the long run.
The key to making the most of your tax deductions is documentation. Keep well organized records of your actions and activities (for your business as well as your personal activities). It will be easier for you to sort through the records when they are in order. Good documentation will help you discover any of those little deductions you may have otherwise missed. The more deductions you uncover the lower you will be able to push your tax bill.
Nick Maddux has been in the finance industry for 3 years; he contributes to blogs that deal with insurance deductions and where to get a free credit score report.
- Tax Deductible Expenses for Small Businesses (2010taxes.org)
- Tax Deductions Can Help To Improve Your Bottom Line (2008taxes.org)