Owe Less Money
It’s that time of year again; time to sort through the piles of paperwork on your desk and find all the items necessary to do your taxes. As you do this, thoughts like, “I hope I don’t owe.” and “I hope I haven’t forgotten any paperwork or receipts that I can write off.” may cross your mind. The Anderson & Culpepper Group in Lebanon, Tennessee is here to remind you of a few common deductions that you may be able to take advantage of to lower your taxable income.
Contributing to an IRA, either through your place of work or on your own, is not just a great way to save for retirement; it is also a fantastic way to lower your taxable income. According to The Anderson & Culpepper Group, the government will allow you to deduct up to $6,000 of contributions or $7,000 if you are over 50 years old. And don’t forget, if both you and your spouse contribute, these amounts are doubled.
Did you contribute the maximum amount to your IRA last year? If not, the tax experts at The Anderson and Culpepper Group have some good news. As long as you contribute to your IRA before the April 15th tax deadline, you can put it towards your 2020 taxes. Note: let your IRA administrator know that the contribution is for last year so it can be used as a deduction.
And speaking of investing, while we always hope for the best outcome, that is not always the case. Sometimes we lose money. But there is a bright side...the government allows you to deduct up to $3,000 of your investment losses (if your losses outweigh your gains).
An unreimbursed employee expense is another common tax deduction to take advantage of. When you arrive at The Anderson & Culpepper Group with your paperwork, don’t forget to bring your receipts (you must have them in case of an audit) for job related items like a laptop, dinner out with a client, anything you weren’t reimbursed for by your employer. And if you are self employed, be sure to keep track of your miles as you can claim $0.575 for each one.
Onto the next common deduction...non-cash charitable contributions. You know those clothes you haven’t worn in a couple years? Well drop them off at Goodwill or another donation site and write them off. The IRS lets you deduct the fair market value of your item (don’t forget to account for your item’s condition). Although it is only required by the government for donations over $250, Goodwill, etc. will happily write up a receipt for you as proof of any of your generous donations.
Own a home? Of course you know the property taxes you pay are deductible...and that can be a lot in some parts of the country. But did you know that it isn’t just your primary residence you can take the deduction for? Do you own acreage that hasn’t been built on? Write off the property taxes. Do you own a second home/vacation home? Write those property taxes off also. Basically if you pay property taxes, write them off. There is no limit to the amount of properties you can do this for.
You know that Health Savings Account (HSA) you have been contributing to? Well consider that medical savings account of yours a tax-advantage because the funds you deposit into it are not subject to federal income tax. Like contributing to your IRA, you can contribute to your HSA (up to $3500 for individuals, $7,000 for a family and $4,500 if you are 55 or older) up until April 15th which will lower your taxable income.
Well, I hope a couple of these deductions are of help to you. Now you just have to go find your paperwork, receipts, etc. In the meantime, if you have any tax related questions, contact us to set up an appointment.