Commonly Overlooked Tax Deductions to Watch Out For

Tax season is upon us, and with it comes a lot of work and a lot of stress. It is everyone’s goal to come out of a tax filing with some extra money in pocket – or at least to have to come up with as little out of pocket as possible. Therefore, it is extremely important not to miss any and every possible deduction you can take whenever you are preparing your tax forms. If you are not an expert in tax code, then it is likely there are some deductions you could miss if you are not conscious of them. Here are some commonly overlooked tax deductions to watch out for:

State sales tax. It is hard to miss this deduction, but many people skip over it in favor of the state income tax deduction, which makes sense, considering state income taxes are often the bigger tax burden. However, you might want to reconsider if you have made any large purchases over the past year, as sales tax on automobiles and homebuilding supplies can really add up. Many people overlook the sales taxes they paid on these major items, and therefore fail to even make the comparison when itemizing their deductions.

Charitable donations. It is easy to forget the small contributions you make toward charities over the year, but it pays to keep records of them because they really can add up. In addition to that furniture you dropped off at the Goodwill, you can also write off payments to your child’s PTA fundraiser, any supplies involved in making those cakes for the bake sale, and any mileage your car incurred while driving to and from charitable events, among other things.

Caregiver expenses. If you are the responsible caregiver for you parent, then you can write off the costs associated with providing that care, from nursing home bills to in-home health aides.

Mortgage-related costs. You can write off any points you paid to get your new mortgage loan or refinance your existing mortgage loan, as well as any interest you paid on your mortgage over the course of the year.

Job-related expenses. Costs related with finding a job, maintaining a job, and moving for a job can be written off. Common expenses that often get overlooked include transportation to and from interviews and training, employment agency fees, moving company fees, and costs associated with marketing yourself for a job (business cards, resumes, websites, etc.).

It may be possible for you to fare better on your taxes this year if you dig in this list of commonly overlooked deductions. Tax time requires some serious time and thought, but if you put those two things in, you can increase your chances of getting more (or giving less) in your annual dealings with the IRS.

About the Author: Maryalice Dunwoody is a tax advisor who enjoys helping family members and friends maximize their returns. When she’s not working, she relaxes with the oolong tea she loves most and searches goldenmoontea.com for new blends and gifts for others.

Why You Need to Hire Someone to Prepare Your Tax Return

The deadline for turning in your 2011 taxes is quickly approaching. Millions of Americans need to get their paperwork in order and file by April 15. Are you ready? Lots of people choose to do their taxes themselves, but others spend the money to hire a professional. While some people think that hiring someone to do their taxes is a costly, unnecessary expense, others wouldn’t trust such an important task to anyone but a professional. Hiring a tax professional is an excellent idea. No matter how simple your taxes are or how much you think you know, you need to hire someone to prepare your taxes. Here’s why.

You’ll Get the Best Result
Tax professionals such as accountants and agents are experts at what they do. They have years of training, education and experience, and they know the tax codes inside and out. You need that knowledge to get the best result for your return. Tax professionals will help you to get the maximum refund that you qualify for. They’ll help you identify deductions that you qualify that you may have otherwise been unaware of. When they take a look at your finances, they do so as an unbiased third party. They’ll be able to see opportunities to reduce your tax liability that you might overlook on your own. When it comes down to it, if you have your taxes prepared by a professional, you’re much more likely to get the highest refund possible for you.

You Don’t Have the Time
Preparing your taxes is a very time consuming task. If you have very complicated taxes, you can’t just sit down and get them done in a few hours. With work and family, you may not have the time to devote as much attention as necessary to your taxes. If you don’t have adequate time to spend, you won’t get them done right. You might make careless errors because you’re rushed. If you hire a professional, they’ll spend a lot more time with your finances because it’s their job to do it.

You Could Make a Mistake
If you do your own taxes, you could easily make a mistake that a professional wouldn’t. You might not thoroughly check your work and make a mathematical error, or you might have an incorrect understanding of something and not realize it. If you make a mistake on your taxes, it can cost you. It will take you a lot longer to receive your refund, and you could even be audited or accused of fraud. You need to hire a tax professional to protect you from yourself. In most cases, you’ll sign a contract with a tax professional in which they agree to represent you and stand by their work if the government decides to question you. This kind of reassurance is great to have.

The Bottom Line
The bottom line is that taxes are complicated, and they’re something you need to take seriously. For those reasons, it’s best to hire someone to help you. As long as the person you hire is educated, reliable, and has references that check out, you’ll be much better off, and you’ll have one less thing to worry about this Spring.

 

Lisa Haan has weighed the pros and cons and will be hiring a professional tax preparer this year. This will free up time for her to share more great money saving tips with help from the world’s best grammar checker.

Tax debt: Ways in which you can pay off IRS debt

If you think that you are having problems with tax debt, there are various ways in which you can pay off your tax dues. If you are having financial problems in general, you can include your tax debt in your debt consolidation. You can consolidate debt in order to pay off all of your unsecured debts. However, there are some other tax debt pay off options too.

Tax debt pay off options

The Internal Revenue System or the IRS offers you various payment options that can help you to pay off your IRS taxes easily enough. The different pay off options are:

1. The installment agreement – In installment agreement you are allowed to make monthly payments.

Some of the different installment agreement types are –

  • Partial payment – If you don’t even have the ability to make minimum payments too, partial payment is the most suitable tax debt relief option. Under this payment option you can make the payments as per your affordability. However, the IRS will re-evaluate your financial situation every 2 years.
  • Guaranteed – If you owe less than 10,000 USD to IRS, guaranteed installment agreement is one your viable tax debt solutions. If you want to qualify for installment agreement, it is essential for you to acknowledge that you will file your taxes and pay it off within the right time for the coming years. However, you may not be eligible for this type of payment if you had made payments through this payment plan.
  • Streamlined – In streamlined payment option, there is no requirement for you to fill out 433-F Form which IRS needs to analyze your finances. However, if you want to make tax payments through this agreement, the amount which you owe should not exceed 25,000 USD. In addition, you may also require to agree to 60 month pay off period with the IRS.

2. Offer in Compromise – In OIC, the IRS does not require you to pay the full amount which you owe. The offer in compromise is more like the debt settlement pay off option. However, the IRS needs you to agree to some terms and conditions before making payments through OIC, else the IRS can even revoke your OIC.

3. Currently not collectible plan – Under the currently not collectible plan you are not required by the IRS to pay your due taxes for the time being. If you do not have enough cash in your hands, this might be your best tax debt pay off option.

However, if you want you can also take the help of a debt help attorney who can provide you in handling and paying off your tax debts.