It's officially Spring. Gone are the days of brisk winds and sub-freezing temperatures. Replacing them is warmer weather, good sports and lots of rain. Also replacing them is the half magical, half stressful 18th day of April.
For you lucky few who don't know the significance of April 18th this year, it's TAX DAY. It’s such a well-known day that Hallmark has even deemed it worthy of an e-card exchange. Some filers will get a refund while others will be pulling out the checkbook for your least favorite uncle, Uncle Sam. Regardless of where you fall on that spectrum, here are a few tax deductible things you may already be doing which could save you some money.
Did you make non-cash charitable contributions?
Most of us are aware that monetary donations can be deducted from our taxable income to reduce the tax bill but be sure to keep track of non-cash charitable contributions too. Think Goodwill runs! These can add up to a large deduction.
Did you pay child (and/or dependent) care expenses?
If you and your spouse are both working outside of the home, you can get a 20% credit up to $600 per child (max $1,200) based on the expenses you paid for child care.
This can be used for summer camps and after-school programs as well. Also, if you are caring for your parents you may qualify for a similar credit.
Did you purchase a new home this year?
You are allowed to deduct all loan origination points on your loan in the first year on your primary residence. Also, if you refinance your loan, you can amortize the points paid over the life of the loan.
Are you self-employed?
If so, you likely qualify for many tax benefits. In fact, it’s too many to list! You should certainly seek the advice of a tax professional to assist you with taking full advantage of the benefits of working for yourself. For starters, though, be sure you're:
- Deducting health insurance premiums
- Deducting business expenses directly from income
- Keeping track of the mileage driven for work
- TIP: we recommend keeping a notepad in the car to record business mileage so you don't forget.
- Saving into a retirement plan that maximizes your pretax contributions.
Did you go job hunting?
Any expenses you incurred while looking for a job, subject to itemized deduction limits, can be written off for tax purposes.
Once you have a better idea of your total itemized deduction, you should compare that amount with the standard deduction. It might be that the standard deduction is higher, in which case you should take that option.
Clearly, there are ample ways to reduce your tax bill, hundreds of ways in fact. You want to ensure that you're taking advantage of the ones most appropriate for you. We hope this list helps, and we suggest you find a trusted tax professional to provide a second set of eyes on your return. They’re a vital part of building out your Financial Dream Team.
In the month of February, Wela is teaming up with Barron Barnes, CPA of Capital Accounting & Tax LLC to write about taxes. Barron has extensive experience in business consulting and financing as well as corporate, partnership and individual income tax planning. He has been involved in both the audit and tax planning work for manufacturing and real estate companies and has clients in many different industries including real estate, architecture, interior design, equipment sales and leasing, printing, lumber manufacturing, advertising, film production and wholesale supply. If you have tax-related questions, you can reach out to Capital Accounting & Tax at (404) 947-7400.