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Personal Income tax deductions are more important in this economy than ever. Carefully considering our possible write offs will lessen what we owe, and increase the likelihood that the check really will be in the mail.
Business Expenses
Save all receipts and write off business expense, as these take away from your personal income. Consider the amount that is racked up monthly on your cell phone bill. What percentage of that is for work related calls? How about your internet / cable bill? If you are using the internet for work related matters, deduct a portion as well.
If you have a home office, you are eligible for a deduction on part of the mortgage. Calculate the percentage of the total square footage that is considered office space, and deduct an equal percentage. You can also write-off some of the expenses for your utilities that benefit the home office, and even the cleaning lady who takes care of the office space. Financial Web explains this a bit further in their article for Self-Employed deductions.
Finally, consider mileage, driving costs, and the car’s wear and tear. Deduct that as a business expense as well! Taking advantage of these legitimate benefits will increase your return in April.
Big Changes
If you have had some big changes in the last year: you bought a home, sent a student off to college, or had a baby, you will be eligible for additional tax credits. These personal tax FAQs will help explain that you could be raking in a hefty credit, especially for that new home, if you are in the “right” income bracket. Tack on an additional $1000 in credit with a child tax credit.
That said, now’s the time to buy if you can! Take advantage of those credits if you don’t own a home but can afford to buy one. You’ll gain deductions that will afford you a much larger return.
Giving Back
Most people doing the “dirty work” these days don’t have the ability to fork over a bunch of cash as a charitable donation, no matter how much we’d love to, but still be sure to count up the charitable donations that you have accrued! Many taxpayers make the mistake of only deducting actual dollar amounts that they donated to various charities. However, anything that was a donation, from the big house clean up turned drop-off at Goodwill, to the wrapping paper that was purchased as a fund-raiser is deductible. You have likely donated to a friend participating in a walk-a-thon, or purchased supplies for your child’s school. Careful consideration of IRS procedure is important to heed, but there are likely significant donations that you can add in.
Lastly, remember that what you pay out makes for less of what you pay in, so take advantage of all of those possible write offs. You are already on the right track!
