Spring has sprung, which means longer days and sunnier skies. It also reminds us that the close of tax season and the April 15 deadline are fast approaching. If you have not started, review all necessary tax documents and last year’s return. Don’t wait. The more time you dedicate to preparing your taxes, the happier you will be with your return results.
As you begin making last-minute tax preparations, consider the following deductions that are often overlooked due to the mad rush to file before the deadline.
Receive More After Giving
Gone on a recent camping trip with the scouts? Delivered food to those in need? Most people remember their monetary donations to nonprofit organizations but often forget to write off auxiliary expenses, including the cost of the scout leader uniform or the manuals required for volunteering. Any mileage incurred for these charitable organizations counts as well. Keep a record and deduct $0.14 for every mile you drive.
Second Home Property Taxes
Don’t overlook deductions associated with your second home. While filers focus on mortgage interest deductions and real estate taxes associated with their primary residence, many don’t realize these same deductions also apply to secondary homes. Note: Specific limitations may apply to mortgage interest, but be sure to deduct real estate taxes for every property you own.
If you recently relocated for a job, you may be entitled to specific tax deductions. Transportation expenses and the cost of moving your personal belongings may be deductible.
Note: There are specific requirements related to distance and time but, luckily, there are no income limitations when taking this deduction.
Home Office Deduction
Is your office located inside your home? If so, you may be able to take a home office deduction if the space is used exclusively for job-related matters. The so-called safe harbor rule, which went into effect in 2013, allows a maximum deduction of $1,500.This simplified method reduces the paperwork and recordkeeping generally required when calculating a home office deduction.
Note: You can choose to use the simplified or general method when taking this deduction – whichever you prefer.
Save on your Children
Did you send your children to summer camp? Are they enrolled in an after-school care program? If you and your spouse earned income this year that was used to pay for childcare, you may be eligible for a credit. This only applies to children under 13 years old.
For future planning: If your employer offers a Dependent Care Flexible Spending Account, consider using it and pay up to $5,000 of these child-related expenses with pre-tax dollars.
If you are using a tax professional or an online tax service, you can deduct the cost of your tax preparations.
Consider these potential deductions and file your taxes. Then, review your results.
Consider increasing the amount of tax withheld from your pay. You will gradually pay more during the year, but you will no longer have to suffer through writing a check to the IRS.
Receive a big refund?
We all love receiving a large check in the mail, but if you slightly reduce the tax withheld from your pay, you have the flexibility to spend more all year.
Still need more time?
While procrastination is not recommended, many taxpayers need more time to file. If an extension request is filed by April 15, individuals are entitled to a six-month delay. However, those who owe money are still required to make payment by April 15.
With more than 20 years of experience working with healthcare providers, Julius Green is the tax practice leader for top 25 U.S. accounting firm, ParenteBeard, in the Philadelphia region and leads the exempt organization tax practice. He provides consultation on all tax compliance and consulting matters that impact the firm’s nonprofit, healthcare, senior living services, higher education and membership organization clients.
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