Sheila Holmes Howard, ABR, CNS
Let's be real: tax time is typically a stressful period for most of us. But did you ...
Let's be real: tax time is typically a stressful period for most of us. But did you know there are things you can do at the year's end to make things easier for you come April?
Here are some tips from Jackson Hewitt that taxpayers should consider while time is still on their side for 2017 taxes:
Select a Tax Pro. Tax filing is complicated. Finding a professional tax preparer should be at the top of your list to make sure you get the most from your return. You want a tax pro that is well-versed in all of the recent federal and state tax laws and current changes so you get all the deductions and credits you're entitled to.
Hunt and Gather. Time to start digging through those piles; you've got documents to pull together that are needed to file your annual tax return—and more coming in the weeks ahead. Stay organized by separating paperwork into four simple categories: income items, deductions, life changes, and other. If you have self-employment activity or experienced other significant events, such as taking care of parents or losing a job, you can probably use a couple more categories. When it’s time to meet with your tax pro, you will appreciate having everything you need at your fingertips.
Reduce Taxable Income. Even if you contribute regularly to your traditional 401(k), or a similar workplace retirement plan, consider contributing up to the max before December 31 to reduce your taxable income for the year. For those with an IRA, keep in mind that you have until April 17, 2018 to make 2017 IRA contributions. If you’re 70½ or older and you have a traditional IRA or conventional pension plan, be sure you’ve taken your annual required distribution to avoid penalty.
Be Generous. Declutter and reap a tax break. Donate your gently used, unwanted items (in good condition) to a qualified charitable organization. Remember, only contributions to IRS approved charities are deductible. Also, be sure to retain receipts for any donated items you've purchased, like food or gifts.
Scholarly Contributions. Review your upcoming education expenses; consider maximizing your tax return education credits by prepaying college tuition bills that are due in early 2018. This can result in a bigger credit on this year's Form 1040, as you can claim a 2017 credit for prepaying tuition for academic periods that begin in January through March of next year. Talk to a tax pro if you have any questions.
Homeowners Haven. You can deduct the mortgage interest on your first and second home that you pay on loans, home equity lines of credit, and on construction loans. Did you buy that boat or RV last year? You may be able to deduct the interest on your tax return. And don't forget that your real estate and sales taxes may also be deductible.
Small Business or Self-Employed. There are dozens of considerations, tax deductions and even tax credits available to small businesses and for those who are self-employed. Be sure to know all the rules related to your full-time business or smaller business on the side. While extra deductions including travel expenses, computer expenses, cellphone, internet fees and business gifts are often overlooked, they can often make a better tax bottom line.
That Miscellaneous Sweet Spot. "Miscellaneous expenses" is a catch-all category that includes tax preparation fees, expenses for income-generating hobbies, gambling losses, unreimbursed employee expenses such as union dues, travel for work, business-related gifts, and more.
Source: Jackson Hewitt