If you go into a tax preparer's office, then chances are fairly good you will overhear the following question "What are tax deductions?" While many people may not worry about tax deductions, there are times when it can be particularly beneficial to check into tax deductions, and what they can do for you. Ideally, you should talk with a tax professional to see if itemizing your tax returns and trying for as many possible tax deductions as possible before you begin filing for it yourself. The following information is designed to help provide you with the information that you need so that you can know what your tax preparer is talking about.
- What are they? What are tax deductions though? Simply put, tax deductions are items that you can use to help lower or decrease your taxable income. In other words, tax deductions are a legal way that you can go about paying lower taxes.
- Some examples. There are literally hundreds of different deductions that you could choose to use that is if you are qualified for them. Each of these different deductions can fall into one of several categories some of which are listed here. Medical and healthcare costs, state and local income taxes, mortgage interest, property taxes, union dues, job related expenses, tax preparation fees, charitable contributions and more. For a more complete list of all the different categories talk to your tax preparer or lawyer,
- Receipts, receipts, receipts. One thing that is necessary to take full advantage of the tax deduction is a receipt. Simply put, if you are looking at trying to deduct a particular expense on your next tax form, be sure that you have a receipt. What this means is that if you are thinking itemizing your tax return next year, make sure that you have a receipt for every single expense that you incurred over the coming year. Try to have as the receipts as organized and categorized as possible prior to seeing your tax preparation expert.
- It's never too late...mostly. If you think of a particular deduction that you could have used after you have already filed your tax return, it's still not too late...usually. As long as you file your amended tax return (along with any corroborating evidence) within three years of that return, you can still reap the benefits. Before you tax this step, and amend your tax returns, make sure that you have an expert look over the file to ensure that you haven't missed anything, or that you haven't ended up saying something that wasn't true.