5 Savvy Ways To Maximize Tax Deductions Next Year

As the end of the year approaches, thoughts to turn to upcoming April 15th deadline for income taxes. It may be to your advantage to take certain actions that will increase the amount of deductions for the year or decrease the amount of income you must claim. Here are a few ways to maximize your deductions for your upcoming tax return:

Max Your Retirement Account

The first measure you should take is to ensure that you have put aside the maximum amount allowed for your individual retirement account (IRA). The amount you can invest in a retirement account will depend on whether you contribute to other forms of retirement accounts, such as 401k or 403b. A tax consultant can advise you on the best strategy to maximize your deduction each year.

Calculate Your Medical and Dental Expenses

If you have had a number of medical or dental expenses during the year, you should carefully add up your expenses to determine if they reach the required level to be deducted from your taxes. The amount must exceed 7.5 percent of your adjusted gross income.

Casualty and Theft Losses

If you have experienced damage from a natural disaster like a flood, hurricane, tornado or earthquake, you can deduct the damages that were covered under your insurance policy. You will need to keep careful records of the expenses for cleanup and repair of your home or other property that incurred damage from the event. You can also deduct the loss if your room was robbed of electronics or other valuable items.

Maximize Your Charity Deductions

If you have articles you are not using in storage, now is a good time to think about donating them to your favorite charity to receive the charitable deduction on your taxes. Clothing, electronics, furniture and other items can be donated to organizations that will provide a receipt for your tax return. If you have an automobile that is still serviceable but that you no longer need, consider donating it to a worthy organization like the Newgate School, which uses these vehicles to teach auto repair to students and also provides vehicles for single mothers who are learning to be self-sufficient. You’ll get a tax deduction for doing so.

Business Use of Home or Car

If you are not reimbursed for certain expenses on your job, you may be able to deduct these expenses on your individual tax return. However, you must have clear records about the times your home or vehicle was used for business, as well as other particulars about the occasions.

The actions you take before the end of the year can affect your ability to take advantage of tax advantages on your upcoming return. Keep these tips in mind, and you will be ready to take steps to minimize your tax burden.

Leave a comment

Your email address will not be published. Required fields are marked *