For Mark Roberts’ Use: As we wrap up 2015, you might already be thinking about your state and federal income taxes. Toward the end of each year, it’s a good idea to assess your income over the past year, find possible deductions, and take the right steps to lower your income tax burden.
Many Americans get into a rush each year, overlook valuable deductions that are available to them, and overpay on their income taxes. If you don’t want to make this mistake, it makes sense to start looking for deductions now, rather than waiting until you’re in a rush next spring.
The number one tip we can offer you is to save your receipts! Take the time now to create a filing system for receipts, because you can deduct all sorts of expenses on your taxes, such as:
- state and local sales taxes
- unreimbursed medical and dental expenses
- charitable contributions
- moving expenses to take a job (in some cases)
- tax preparation services
- health insurance premiums
Along with keeping receipts for these important items, you should also keep records of:
- mortgage interest
- points paid on your mortgage
- dependent care expenses
- contributions to your traditional IRA
- payment of student loan interest
- investment expenses
- union dues and other expenses associated with work
- home office expenses and other costs associated with running a home business
Not all deductions are available to everyone. For example, some deductions phase out as you earn a higher income. Other deductions are subject to sunset provisions, and you will need a tax professional to assist you with identifying those.
In some cases, you might have hit a yearly limit with certain deductions. It might make sense to postpone certain expenses until January, if you can, such as medical or dental payments. These are issues to discuss carefully with your tax professional.
Before the holiday season gets you too busy to make adequate plans, organize your home office and start putting receipts and records into labeled files. When tax season rolls around in the spring, you will be ready to locate and take advantage of all deductions available to you.