It’s coming up on tax season folks, so that means it’s time to start thinking about ways to make those deductions count.
Too many people, especially those who have had a rough financial year or are coming out of bankruptcy, believe that tax benefits are just those things wealthy people talk about. Well, that’s pretty far from the truth. In fact, even though the IRS comes off as meticulous and bureaucratic, they do allow a number of deductions for every financial demographic.
Before we get into the basic deductions you can claim, hear us out on a couple of tax preparation tips. First, do not, under any circumstance, consider getting a loan on your “expected” tax return. Car dealerships are recklessly advertising deals where they “estimate” your return and use that toward a down payment, for example. Do. Not. Do. This. It’s way too big a gamble and completely unnecessary.
Secondly, consider hiring a certified public accountant to do your taxes. You know, someone from an actual, private accounting business. The H&R Blocks and Jackson Hewitts of the world are to the tax preparation world what McDonald’s is to fine dining. They get you in quickly, have recently hired people handle your information and charge you a bunch for typing numbers into a computer. And yes, a CPA may use similar software. But at least you are also paying for real insight into your tax situation. Plus, the odds are very good you’ll get a better refund, if you have one coming to you. Lastly, they can make you feel like an actual client, not just another person waiting in a cubicle in a temporary storefront.
Okay, back to the top.
Have you been able to donate at all this year? Look, we understand that if 2010 is a year you would like to forget, relative to money, that donating never made it into the monthly budget. But if you managed $25 to an environmental foundation or dropped a few bags of clothes off at Goodwill, those receipts are worth something when it’s time to file. If you volunteer at all, ask the group about “gifts in kind” or how manual hours are reported. Chances are you may have donated and not realized it.
Child care can be result in some tax benefits, too. A lot of people tend to forget that families who pay for child care are eligible for up to $6,000 for two or more kids. Keep the paperwork that outlined the price and any proof of payments you may have. Hopefully you didn’t pay in cash, as that can make things difficult to track. Even so, ask the group to hand-write you a receipt. They have to report it as well so they’ll be glad to provide a record of payment for you.
Given the job market over the last year or two, many Americans have had to relocate to find work. If you did, you may eligible to deduct a portion of your relocation expenses. There are some benchmarks to meet of course. For example, you need to have been employed (not necessarily by the same company) for at least 39 weeks of the first 12 months following your move. And, the move needs to have resulted in you commuting at least 50 miles farther than you did before. In North Carolina, if you moved from Charlotte to Raleigh or even from Greenville to Raleigh sometime in the beginning of 2010 and meet the time limit, you should be all set.
These few examples are among the many possible tax deductions you can receive. Your CPA can tell you about a few more, to be sure.