Tax Strategy That Could Save You Money
Despite all of the news we have heard about tax simplification, the current tax code still remains a complex combination of regulations, statutes, rulings and forms that are written primarily in highly technical language and cover thousands of pages. Most taxpayers are best served by using a qualified tax professional to either prepare or review their tax returns. A financial planner can help by providing tax planning strategies that often might be overlooked. Here is one to consider:
Taxpayers are eligible to deduct certain charitable contributions. Unfortunately, many people do not plan well and miss out on these deductions. While you may not think that the items that you give to charity have much value, you can research how much these items actually sell for to determine what you can claim. Keep in mind that the tax law says that taxpayers cannot deduct anything unless the donations are in good condition or better and receipts may be necessary as back-up or proof.
Another trap for taxpayers is not keeping track of out-of-pocket expenses that are associated with a charity. For example, the cost of stamps you buy for a fundraiser or the cost of food that you prepared for a donated meal or the cost of supplies you donated to a charitable organization can be fully deducted. In order to deduct these expenses from your tax return you need to keep track of them and then total those deductions.
A good tax preparer can determine whether or not you can deduct home office deductions and/or potential vehicle deductions if you own your own business or work out of your own home.
A good strategy to use is to look at your annual checking account transaction register and create a list of potentially overlooked deduction items from the previous year and talk with your financial planner and tax advisor. Make sure you carefully track those deductions you wish to use. This will help when filing tax forms.
Email questions to firstname.lastname@example.org or call us at 541-574-6464. Julia Carlson is a registered Principal with, and securities are offered through, LPL Financial. Member FINRA/SIPC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor