What Tax Deductions Can You Take?
No, this tax article isn’t a misprint! It’s the end of the year, and ’tis the start of tax season. Our good friend – and Certified Financial Planner – Michael Hardy, of Mollott and Hardy, Inc. (along with Efile.com), just reminded us about one of the greatest holiday gifts you can give yourself: to be well organized and make sure you have all the relevant documentation for tax time NOW, so you can save as much money as possible when you file your 2011 taxes.
Here are some key questions Michael wants you to ask yourself to help determine what deductions you are eligible to take advantage of. –Thanks Michael!
Make Your Job Work for You!
- Do You Pay For Parking At Work? You may be able to deduct the cost of parking.
- Do you Use Your Car For Business? You may be reimbursed for business use of your vehicle based on miles driven.
- Do You Ride A Bicycle To Work? If so, you may be reimbursed for the cost of the bike as well as repairs and storage.
- Have You Gone On Work Related Trips? Keep all your receipts – even down to dry cleaning and baggage handling.
- Have You Lost or Changed Your Job? It takes money to look for a new job – and you might be able to deduct these expenses.
- Do You Work From A Home Office? You may be able to deduct expenses like internet, phone, furniture and security
- Did You Move Closer to Work or to Take a New Job? If your new residence is at least 50 miles closer to your workplace than your old home, you qualify for a deduction of your moving expenses.
- Do You Belong To A Union? Union dues and initiation fees are deductible.
- Do You Make a Low Income? Check if you qualify, and don’t miss out on the Earned Income Tax Credit.
- Do You make Retirement Savings Plan Contributions? If so, you might be able to get a tax credit for qualified contributions.
Green Living Puts Green in Your Pocket!
- Did you buy an electric car in 2011? If the car you bought in 2011 is a plug-in hybrid or fully electric vehicle, you could qualify for a tax credit of up to $7,500.
- Did you improve your home with energy-efficient appliances, windows, doors, or other energy saving devices? You may be able to deduct up to $500 for the expenses, or even more for installing renewable energy sources.
Family-Friendly Tax Savings!
- Do you have children or other dependents? You may qualify for a $1,000 credit per dependent with the Child Tax Credit.
- Did you adopt a child? There is a special refundable tax credit for which you may qualify. The credit can reimburse up to $13,360 of qualified adoption expenses.
- Are you a student or the parent of one? If so, you have a choice of credits. You may be able to receive up to $2,500 per student.
- Did you get married? Congratulations! There are several tax-related implications which you should know about.
- Did you get divorced? As with marriage, there are several tax-related implications in cases of divorce or separation. For example, alimony is deductible while child support is not.
- Did you spend money on medical care? Most people did, of course. But if you had a particularly tough year, you may be able to deduct any medical expenses which exceed 7.5% of your income.
- Do you employ your child in a family business? If you hire one of your children who is less than 18 years old, you may not have to withhold taxes from their salary for social security, Medicare, or unemployment.
If your taxes are complicated in any way, or you are unsure about what deductions you are eligible for – don’t guess – consult with a CPA. Hiring a certified accountant may cost you up front, but a good accountant will help save you in the end. Happy Early Tax Planning!