It’s Tax Season Time Again, Do You Know Your Deductions?

by on July 17, 2018

For some people, tax season is like hitting a mini lottery; they enjoy a substantial return that they use to pay off debt, buy home furnishings or even plan a vacation. However, for most people, it comes with an enormous amount of stress and uncertainty. With the ever-changing tax laws and deductions from one year to the next, it can become overwhelming, to say the least. If you purchase a new home, get married or divorced or put a kid through college all of these things can affect your return. Luckily, there are ways to reduce the amount you owe by planning ahead.

Owing Money to the IRS

No one wants to owe money to the IRS. However, it happens to many people who either claim too many dependents throughout the year, cash in early on a retirement account out of necessity or simply don’t have anything to deduct. The last thing you want to do is to ignore the debt you owe. The government is one of the few agencies that can garnish your wages and put a hold on all of your bank accounts. Thankfully, if you find that you now owe money to the IRS and are unable to pay it, you can get assistance. There are companies that specialize in tax relief help. They work directly with the government agency to come up with either a reduced settlement or an affordable repayment plan.

Know What You Can Deduct

Many people send in a check each year to the IRS because they missed deductions that are allowable. For example, if you work from home you are able to deduct not only your supplies but also things like your cell phone if you use it for making business calls. You can also deduct the office space in your home, not only the square footage but also the cost of operating it including the electric, heat, and even your internet service. If you travel for your job you can deduct a percentage of the gas and wear and tear on your vehicle.
These are just a few things that many people who work from home fail to deduct. If you don’t work from home, there are still ways to reduce the amount you owe. If you moved out of state for a job, and the company you now work for did not pick up the tab for the expenses, you can deduct a portion of it. Property taxes, medical expenses, and daycare costs are all things that you can list when filing to reduce the amount you owe. If you are unsure of what you can and cannot deduct, have a tax attorney file your return annually.

Claim Less

Ultimately, the best way to avoid owing Uncle Sam money each tax season is to take fewer deductions. If you don’t own a home and don’t have children, you should claim no dependents at the single rate. The W-2 form even has a place where you can have additional monies collected each paycheck. You can try the zero dependents and then when the next season rolls around you can make the necessary changes until you don’t owe any more money.

The best way to ensure that you take all the deductions allowable and owe the least amount possible is to stay informed and updated. Each year the IRS sends a new booklet to citizens who previously filed a return. This booklet includes the newest changes in the laws and reviews the standard, prior deductions you can take. Of course, if you want to make sure that you take every deduction acceptable, paying an outside company to prepare and file for you may end up as the better option.

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