Although it's obviously very important to file your taxes in a timely manner and pay anything you owe, you want to optimize your return to claim all eligible credits and deductions. Since that can get quite tricky with the wide range that is available, we want to share 6 smart ways to optimize your tax return.
In most cases, pooling itemized deductions are going to have the biggest impact on your return. You can definitely lower your income tax bill by taking as many available deductions as possible over the two percent threshold for adjusted gross income.
There has been a persistent myth floating around for a number of years that taking a deduction related to a home office will trigger an audit. As long as you follow the guidelines related to exclusive business use, that's unlikely to happen. The same is true for deducting mileage. The most important thing is to be accurate with these deductions and to have supporting documentation/logs for all of them.
When people think of deducting charitable donations, they often focus solely on very large donations. However, if you look at everything you donate over the course of a year, it likely adds up to quite a bit. That's why it's important to document and track donations of all sizes. Having this information when tax time arrives will help out a lot.
Another area where you can really optimize your tax return is in regards to what you contribute to retirement. This includes accounts like a Roth IRA or Roth 401(k). Not only are you improving your overall financial health, but these accounts will grow your nest egg in a tax-free way for years to come. If you have an employer who offers any type of matching, try to take full advantage of that opportunity.
As you progress in your financial life, investing becomes more important. While it's great when stocks perform well and you're able to sell for a profit, those amounts do get taxed. One strategy for minimizing the tax implications of capital gains is to offset profits by also selling some holdings for a loss.
If you want to work with an experienced and affordable professional to get your taxes filed, we're here to help. We will ensure that your return is fully optimized and that you're able to take full advantage of all credits & deductions that you're entitled to receive.
For more information, visit us at Alpha Tax or give us a call in Anderson at (513) 832-0026 or in Georgetown at (937) 378-3111.