Tax season is about to begin and your mailbox will soon be filled with reporting documents. You need to report all your income, but the goal is to end up paying the smallest amount of tax. The best way to reach this goal is to take all the deductions allowed. Here are a few of the most common deductions taxpayers miss:
Your paycheck stub: Some people contribute to charities through payroll deduction. This amount can be found on your final check stub. The amount you contribute towards your medical premiums are also listed here. Health insurance premiums are a medical deduction when you itemize.
Housekeeping: Home services needed for a qualifying dependent during your work hours.
Donated clothing: Clothing and other goods donated to a charity are deductible, provided you have a receipt and estimate the value of the articles. There are inexpensive software programs to help value donated items. www.CharityDeductions.com is one place to start.
Mileage: Keep track of your mileage while working for a charity, going to the doctor, or running errands for work. The IRS allows mileage deductions for these circumstances, provided you keep a log. The following rates apply to personal cars, minivans, trucks, SUVs, and panel trucks for 2012:
- 14.0 cents per mile driven in service of charitable organizations
- 23.0 cents per mile driven for medical or moving purposes
- 55.5 cents per mile for business miles driven
Carryover items: Net capital losses are limited to $3,000 in any one year. Net losses in excess of this amount can be carried forward to be used in future years. Don’t forget to carry the unused losses over to your 2012 income tax return. Charitable contributions are also limited in any one year, but any excess can be carried forward to the next tax year. Don’t let such carryovers get lost from one year to the next.