It’s Tax Time – Make Sure You’ve Lined Up Your Deductions

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It’s Tax Time – Make Sure You’ve Lined Up Your Deductions

This year, the IRS isn’t giving us an extension until July to pay our taxes, so you need to get your allowable deductions in order. There are less deductions available than there used to be, but here are some important possible ways to reduce your tax bill:

 

Medical Expenses: Throughout the year, as you’ve incurred medical expenses, including prescriptions, you should have accumulated receipts. If you haven’t, you should consider checking with your pharmacist to see if they can give you a printout.

Mortgage Payments: Mortgage interest and real estate taxes are deductible expenses. You should be on the lookout for your Form 1098 from your mortgage lender, as this will typically include the relevant numbers.

Personal Property Tax: If you’ve paid state taxes on your personal property, make sure you keep a receipt so you can get this deduction on your federal taxes. For instance, Virginia charges a personal property tax on cars.

Charitable Donations: If you’ve made a donation to a charity that qualifies for a deduction, you should keep a record of the donation, including saving any letter or other communication that you receive from the charity acknowledging the contribution.

IRA Contributions: As a pre-tax savings mechanism, IRA contributions are allowable deductions, so make sure you have a record of the amount of your annual contribution. \

Educational Expenses: If you are a university student, you should receive a Form 1098-T and if you are paying student loans, you should receive a Form 1098-E.

Health Savings Account (HSA): As another pre-tax savings mechanism, you need to be certain of the amount of your contribution to the HSA. Look out for Form 5498.

The Schedules: As a business owner, you may have deductions on Schedule C, which should be supported with receipts that clearly indicate the nature of the deductions. Similarly, if you are a rental property owner, any deductions on Schedule E need supporting documentation.

Don’t pay more than you have to in taxes. If you have any questions about your allowable deductions and how to document them, contact us today.