Good Morning Dinks. Today we are talking all about taxes. We all know that we need to file our taxes, some of us file our own taxes and some of us (including myself) see the benefit in paying an accountant to file our taxes for us.
Our friends at Go Banking Rates recently published the Commonly Missed Tax Deductions That Can Add to Your Tax Return and we wanted to share their tax tips with Dinks because everyone likes to save money. I know that some people don’t like filing their taxes because they owe money but maybe these 9 tips can help you get a refund this year.
If you have a tax tip please share with us by leaving a comment below or let us know on Twitter.
Are you making these tax deductions?
State Sales Tax
Many people forget to include state sales and income tax as deductions. If you live in a state that doesn’t impose an income tax, adding up all the tax you’ve paid on personal and household items can really mount up. On the other hand, if your state does have an income tax, it’s usually a better strategy to claim that as a deduction for more savings unless you made some high-ticket purchases such as a car or boat.
Claim Your Dividends
Isn’t it great that we can gain dividends on our investments and then claim a deduction on our income taxes? If your investments earned dividends this year, you can save money if you take advantage of special tax breaks. If you reinvest your dividends to purchase more shares rather than taking the income they’ve generated, you’ve reduced your current tax liability. This is one deduction a lot of investors miss.
Check up on your Insurance Company
I had no idea this was an eligible tax deduction. If your insurance company switched its status from being a mutual insurer and began offering stock to stockholders, this process of demutualization will save you money if you sold your shares based on what the share were worth when they were distributed to you as a former policyholder.
Give to Charity and Get a Tax Deduction
Out-of-pocket charitable contributions are often overlooked, especially if they were in the form of many small donations rather than a few large ones. If you’ve covered the cost of postage, baked cookies for fundraisers or given rides to the clients of non-profit organizations, save your receipts. If they total more than $250, you can deduct the amount if you have documentation from your favorite non-profit. If you provided rides or did other significant driving, claim 14 cents per mile for this deduction.
Your Mortgage and Remodeling Your Home
If you remodeled your existing home, deduct state sales tax for building materials if you’re itemizing. If you bought your house, be sure to claim the interest paid on the points on your mortgage. If you’ve refinanced, you have to distribute the points interest over the life of the mortgage. If you’ve made your home more energy-efficient, Energy Star notes there are new tax deductions for the 2012 tax year.
The Self Employed
If you are self employed you can deduct the cost of health insurance premiums you pay for yourself and your family. You’re going to have to dig a bit through Schedule SE. Your health insurance figure from Line 29 is subtracted from your calculated self-employment tax on Line 3.
Additional 2012 tax deductions for the self-employed include contributions to a Simplified Employee Pension (SEP) IRA, which are made pre-tax, as well as the cost of business meals, ongoing education or training, and business use of your home.
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