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Tax Saving Strategies to Discuss with your Accountant

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Tax Saving Strategies to Discuss with your Accountant

While you may not be able to avoid income tax, there are some savings strategies that just might reduce the amount of tax you have to pay. Every year many people over-pay on taxes simply because they are not aware of strategies which can be used to reduce their annual tax bill. Don’t allow yourself to fall into that trap! Read over the tips and strategies below and start thinking about how you can put them to use.

One of the easiest ways to reduce your tax bill is simply to make sure that you take into account all of those little expenses. Unfortunately, this is one area where most people seem to fall short simply because they failed to keep up with all those receipts that are business related over the year. Make a point to keep a central collection area to retain those receipts. It doesn’t have to be anything fancy, even an old shoe box will work. The point is to design an area where you can drop in receipts in and keep them over the next year until it’s time to file your taxes. Just a few ideas of receipts that are easy to forget include parking fee receipts and postage receipts. Over the course of a year they really can add up.

Another important area is to make sure you keep up with all those charitable income tax credits. Of course, we give because we feel it’s the right thing to do, but the tax credit doesn’t hurt either. Consider those clothing donations you made to the local shelter or the pledge you gave a fund raising event a few months ago. Whenever you donate an items, make a point to ask if the charity has tax-exempt status. If you’re not sure, you can also check to be sure they are recognized by the IRS. It’s also a good idea to keep a detailed record of items you donate over the year with information such as the condition of the item(s), the dates you bought or received the items, the original purchase price and even a snapshot of the item you donated. This type of information can help to prove your contribution if there are problems later on. Finally, don’t forget to ask for a signed, dated receipt.

If you took classes or attended training during the last few months in order to improve your job skills, these expenses can also be deducted provided they were not reimbursed by your employer. You can deduct the cost of supplies and books as well as tuition. Make sure you keep those receipts!

Were you looking for a new or another job during the last year? If so, you may be able to claim those expenses. Even if you didn’t land another job, you still may be able to take the deduction. Expenses you can deduct include travel to interviews and resume preparation costs.

Don’t forget all that driving either. In some cases you may be able to deduct travel expenses. For example, if you have more than one job site and were required to travel between locations and your employer did not reimburse you, you may be able to deduct the mileage as business driving. The same holds true for driving for charitable donations and purposes. If you serve on a civic board or even if you shuffle around members of your church youth group, you might be able to take the deduction.

The purpose of this article is to provide general information on tax matters. It suggests general tax tips that may be appropriate in certain situations. The information and opinions are generalizations and may not apply to all taxpayers. It is important that you seek appropriate professional advice before implementing any of the tax ideas suggested.