This is a great way to save yourself some tax dollars if you itemize on your return because you can usually deduct the full amount that you give as long as it is to a qualified organization during the year. If you give monetary donations to a charitable organization keep track of your donations and save yearly giving statements. If you donate items to a place like Goodwill, Salvation Army or others here are some helpful tips to keep track of your donations:
1) Keep track of what you gave and by category as well as how many (i.e. shirts, pants, shoes, hats, furniture)
2) Calculate the value of what you donated by using a value guide given below. Your item may be on the higher or lower range of values based on its condition at the time of the donation.
To deduct medical expenses you must incur medical costs over 7.5% of your adjusted gross income if you are over the age of 65 and 10% if you are under the age of 65. For example, if you adjusted gross income was $40,000 you would have to have over 3,000 of medical expenses if you were over 65 and $4,000 if you were under 65 to write off. This could be very beneficial depending on your income and medical situation during the year. Keep track of your doctor visits, hospital bills, prescriptions and insurance premiums you pay out of pocket during the year.
If you are self employed you can deduct the health insurance premiums and long-term care insurance that you pay out of pocket for the year.
Sale of Residence
If you sell your personal residence during the year, you may be eligible to exclude any gain on the sale. The maximum gain you may exclude is $250,000 ($500,000 if married filing a joint return or surviving spouse). You are eligible for this exclusion if you used the home as your principal residence for an aggregate of 2 years out of the last 5 year period ending at the closing date. Bring in your closing statement to us to discuss the exclusion and any other deductible expenses you may have paid at the closing.
IRA Contributions and Withdrawals
IRAs can be a powerful tool for tax deferral and tax savings. It is important that you consult with your tax preparer in order to optimize your tax savings. Since IRA contributions can be made up to the due date of your tax return, making IRA contribution decisions as a part of the tax return preparation process could help you maximize your tax benefits. We can determine the maximum contributions you are eligible for and whether a Traditional IRA or a Roth IRA would best suit you. Consider contacting us prior to making withdrawals other than routine or required distributions from your IRA. This is especially important for large withdrawals or those being contemplated before age 59 1/2. We can help you minimize tax and possible penalties for these withdrawals. We can also inform you of the state income tax consequences of withdrawals from your IRA or other retirement accounts.