As the last quarter of the year has begun and the end of the year quickly approaches, now is a good time for people to think about getting their bookkeeping and receipts in order for the coming tax returns season. The reason you want to begin preparing now is because most people have the tendency to overlook things that could be considered tax deductions and/or credits because they’ve waited until the last minute to get everything in order for their tax returns, and could potentially lose out on saving hundreds, even thousands of dollars.
In an effort to help you minimize the taxes you’ll have to pay, we’ve prepared a list of some of the most commonly overlooked tax deductions and credits for everyone from parents to business owners.
As mentioned in a previous post, the Child and Dependent Care Credit applies to expenses incurred for the care of a child, spouse, or dependent while you are working, searching for work, or attending school.
Children who work for the family business and make a fair wage or salary is another overlooked tax deduction that many miss out on. Salaries of children that work for the family business can be deducted as a business expense. Another incentive for employing your children is the fact that one could shift income from higher tax bracket, say 40%, to a 10% bracket simply by paying their kids, which many people don’t know.
The Earned Income Tax Credit (EITC) is a refundable federal tax credit focused on helping low to mid-level income workers to keep more money from their paychecks.
The safe-harbor home office deduction, which was introduced in 2013, is meant for those who are self-employed and work from home. The calculation is now based on the size of the space used as your home office. It’s a simple calculation $5 for every square foot used with a maximum of 300 square feet.
Expenses that are related to the treatment of medical or dental conditions can also be deducted from income taxes depending on the amount you had to pay out-of-pocket, which are usually unreimbursed costs of bills, prescriptions, and equipment.
With energy efficiency on the rise many people do not realize that energy efficient upgrades not only help to reduce monthly costs, but they could also be eligible for tax credits. If you’ve recently had energy efficiency upgrades completed on your home be sure to save the supporting documentation from the manufacturer to see if you qualify for the credit.
This deduction gives you the ability to write-off a portion of unreimbursed home or auto damage for unexpected events such as hurricanes, tornadoes, or car accidents not caused by yourself.
Many people don’t realize that they can deduct certain mortgage fees in the year that you paid them when purchasing a home, like the origination fees.
Whether for your business or for personal reasons, taxpayers that donate money or property to qualified charities may be entitled to tax deductions.
At Verdeja, De Armas & Trujillo LLP, our team of Miami accountants is dedicated to providing personalized, financial guidance. We provide accurate and comprehensive financial statements as well as in-depth business analyses specific to your business needs. Contact us today for a consultation!