Before you file your taxes this year, be sure to invest just a few minutes of your time to ensure you don’t miss out on these commonly missed tax deductions this year…and every year forward.
In fact, I just had my accountant review one of my client’s tax returns last week. They had missed out on at least $9,950 of taxes that they would have overpaid! Yuck!
So here are the most commonly missed deductions I see my clients miss (As a disclaimer, I am not an accountant, and because Congress has issues making up their minds, these rules could change by the time you read it. Consult your CPA to see which can apply to you):
Many know they can write off mileage, but don’t know how to get the most of it. For example, if you have a home office, you can deduct mileage to and from another office, or another job site). The key is to conduct business in between work locations.
For example, you could stop by a grocery store or Laundromat and leave a business card on their corkboards. Also, if you have a corporation, there are ways to lease your vehicle and save even more tax.
Before you cast stones at me, this means hiring your children to work for your company. As of 2012, you can employ your minor children to work for you where they, AND YOU, won’t pay taxes for their first $5,950 of income each year! In fact, it’s a tax deduction! This could be a great way for you to help them save for college, clothes, or other things that can save you money today!
The Right Corporation
Many set up corporations without any professional help, or just blindly take advice from an accountant that doesn’t understand all of the business benefits. If you’re earning at least $5000 per year, look into at least setting up an LLC. If you start netting at $40,000 or more per year, you should consider setting up a corporation. Those that have corporations can actually pay lower tax rates because they have the ability to pay dividends on top of their wages. The clients I mentioned at the beginning were doing this already, but didn’t realize they could do more and save an additional $3,700 a year! Naturally, consult with your attorney or accountant before making any moves.
Home Office Expenses
Another commonly missed deduction is home office expenses. Many don’t realize they can have a home office and deduct a portion of their mortgage interest, utilities, home insurance, etc. For instance, if your home office (including business storage space) is 10% of your home, this means you can deduct 10% of all of these expenses! This also could save you into the thousands of dollars each year!
Did you know that, in addition to your health insurance premiums, you could deduct your contributions into your Health Savings Account? Many don’t realize that there are many ways to use your Health Savings Account, beyond the doctor’s office, including dental, vision, and chiropractic care, among many others.
These are just a few of the most commonly missed deductions that people miss. If you don’t have a business, you may consider finding a hobby or side business that you can do to increase your tax advantages that you wouldn’t have working a normal job.
Again, I would advise you to consult your accountant to know what is right in your situation. Hopefully, your accountant understands tax rules well enough to help you pay the least that you’re responsible for paying the IRS. I love paying taxes…but not more than I’m required.
Now, take some deductions and save some money!