Each tax season, people across the country miss out on millions of tax deduction opportunities.
1. Be organized.
Having your records organized will make preparing your return easier and might help you with deductions you forgot about. Keep a file of receipts and other records you know will be important.
2. Use proper withholding and estimated payments.
While getting a large tax refund is nice, it may be a greater benefit to have those funds available to spend year round. If you aren’t careful with how much you have withheld, you may be paying more than the required amount. Consult with your accountant to make sure you’re properly covered.
3. Consider giving to charities.
A gift to a qualified charitable organization may entitle you to a charitable contribution deduction against your income tax if you itemize deductions. If the gifts are deductible, the actual cost of the donation is reduced by your tax savings.
4. Manage your itemized deductions.
If your level of itemized deductions is close to what is needed to use them, consider bunching deductions every other year.
5. Use tax-advantaged borrowing.
Not all interest you pay is tax deductible. The interest paid on your mortgage and home equity loans gets treated better than interest paid on credit cards. Also, there may be some tax deduction benefits to margin loan interest.