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Doing your taxes can be so much work and there are so many different ways you can decide to do them. You can do them online, or buy software. You can hire an accountant to do them for you, or get all the appropriate documents and fill them in by hand. No matter how you decide to do them you have to collect the information so that you can try to save money and take advantage of any credits or deductions you might be eligible for.
In 2005, the IRS offered up the information that $842 billion was the claimed value from personal exemptions. I don't doubt for a minute that everyone tries to take advantage of every opportunity to save their hard earned dollars, but there here are some tax deductions that are easily overlooked though.
Deductions: Standard Deduction or Itemize? One of the decisions that could have them most impact on your tax return, financially, is whether you choose to take the standard tax deductions or itemize your return. If you are single tax payer and choose standard for your deduction you could claim $5,350. If you are married-filing-jointly the amount is doubled. Head of household, and single the deduction comes to $7,850.
The GAO which is the investigative arm of Congress found that only 33% of the taxpayers itemized on their 2002 returns. That is an equivalent to a per taxpayer loss of around $438 dollars. When this is totaled we are talking about a loss to taxpayers or overpayment to the government of around $945 million because people did not take the time to itemize.
Itemizing is a lot of work even if your accountant does the filing, because you have to gather all the information. The taxpayer is responsible for accumulating the records to prove their position and then get it to the CPA or a tax person in a timely manner. Most of us don't bother to keep records all year round and this can be a really time consuming process which more often than not gets deleted from the "to do" list.
For homeowners deciding whether to itemize is moderately simple decision to make. By adding up the state and local income tax, the real estate taxes you paid, interest on the mortgage you can then weigh the estimated totals against the standard deduction. If you are over 65 there is an additional $1,300 for single tax payer and $1,050 if you are married-filing-jointly that can be added to the standard tax deduction.
Just because you don't own a house is not a good reason to not, at least, look at the idea of itemizing to save money. Renters can still claim advice fees for investment, medical bills and the mileage and cost of a place to stay if they had to travel, trustee fees, donations to charity, you state taxes, expenses incurred from investment and even sales tax (this is especially helpful if you made large purchases like a car or appliances). These items are all considered deductions that can be itemized on your tax return. Collecting all this information might pay for itself in a return on your yearly tax return. If you decide to itemize and you don't pay income tax in your state you can use your sales tax in place of state income tax.
Learn How to Deduct Commute Mileage and see Newest Tax Deductions that can save you tons of money. Ron Finkelstein is NOT a Tax Attorney or an accountant. He is merely a small business owner who has paid a lot of money over the years to learn a whole lot about Taxes and Time Management. I hope you enjoyed learning how to maximize your limits on qualifying for tax credits and deductions
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