If you are like me, you wait till the last minute to file your taxes because you owe money. Lucky for us, this year we have two extra days. Taxes are not required to be filed until April 17, 2012. I do this because I don’t want the government to have my money any longer then they already do. I also do this because I want to make sure I have accounted for every deductions or tax credit I can get. 63.3% of the population takes the standard deduction, so the other 36.7% of us need to make sure we deduct every possible penny. It never ceases to amaze me that I forget to deduct something every year. Here are a few things that many people forget to include, which can help reduce your tax bill:
- Charitable Contributions – Whether you give cash or non-cash contributions, make sure to keep track of them and keep all receipts. Cash contributions include donations to a church or charity. Non-cash contributions include clothes, household goods, electronics, cars, etc. that you donated to charity organizations such as Goodwill or the Salvation Army. One thing many people forget to deduct are portions of the cost of charity events or charity golf tournaments. Ask the charity what portion of their ticket price or registration is tax deductible.
- State Sales Tax Deduction – If you live in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming make sure to deduct the amount of sales tax you paid. You have two options; you can keep all your sales receipts and calculate the sales tax or take the standard sales tax deduction given by the IRS. The IRS deduction is based on yearly income and they provide a calculator, here is the link to the IRS Sales Tax Calculator. If you live in a state that you pay income taxes, you can take either an income tax deduction or sales tax deduction, whichever is larger. You can’t take both.
- Vehicle Registration Deduction – Your vehicle registration fee is deductible as long as the fee is based on the value of the vehicle and not the weight. You can’t deduct the other fees that are the same for everyone else.
- Child Care Credit – If you have a child you probably already know that you get a tax break for the child, but you can also receive a credit for child care that you pay for while you work. A tax credit is better then a deduction because it reduces your tax bill dollar for dollar.
- Retirement Contribution – If you have any IRA or Roth IRA, you can contribute up to $5,000 ($6,000 if over the age of 50) by April 17, 2012 for tax year 2011. This would decrease your taxable income by the amount you contribute. If you are going to do this make sure that you state it is for 2011.
- Student Loan Interest and Higher Education Costs – You can deduct interest that you pay on your student loan(s) as long as your parents don’t claim you as a dependent. Although, you can claim it even if your parents pay the loan for you. Additionally, if you are an undergraduate student or graduate student and your parents don’t claim you as a dependent, you can claim the tuition expenses as a deduction.
- Casualty and Theft Loss Deduction – Unfortunately, many Reno, NV people experienced terrible wildfires that destroyed homes and property. There are other disasters that happened throughout the country. You may be able to deduct the losses that you incurred. If you were a victim to a theft you may also be able to deduct your losses.
These are many of the common deductions and credits that are missed by individuals that itemize their deductions. Make sure to check with your tax advisor or accountant to verify that you are eligible for these deductions. Good luck this tax season and don’t forget you have two additional days to procrastinate on filing them. I will take advantage of the extra time.