Posted by Cindy Wilson on July 12, 2018 10:00:00 AM
Did you know, millions of taxpayers overpay the IRS each year, often without knowing it? If you haven’t filed your taxes yet, make sure to take full advantage of the deductions available to you. Here are some commonly overlooked ways to help minimize your tax bite:
- Rifle through last year’s receipts. On your federal income tax return, you can deduct either the state sales taxes or state income taxes you paid throughout the year. So if you live in Florida or another place with no state income taxes, the effort of organizing your receipts is well worth it. Even if you’re not a resident in such a state, sales tax may give you the biggest deduction. For example, if you buy a car or some other big-ticket purchase, you might come out ahead with the sales tax choice.
- Tally up your charitable contributions. Not only the big charitable gifts made by check or payroll deduction, but also those little out-of-pocket expenses you may not necessarily think about as deductible: Ingredients for that soup you prepared for a homeless shelter, stamps for a school fundraising mailing. It can all add up. Again, be sure to track down receipts, which youʼll need when itemizing deductions. If your charity work involved driving, you can deduct 14 cents per mile (2018 mileage rate).
Give yourself a head start for the next tax season by considering my top two tax rules:
- Contribute as much as you can to your 403(b) and traditional IRA before December 31st. The larger your pretax contribution, the smaller your taxable income becomes. Not only does this mean a bigger tax refund next year, but a larger income for you in retirement!
- Use other tax-advantaged accounts. Contributions to healthcare savings or flexible spending accounts are also made on a pretax basis.
Itʼs always nice to have a substantial tax refund deposited into your checking account. To help ensure that you receive as much as you deserve, stay on top of tax deductions this tax season and for the remainder of the year.
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