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Some Tax Tips!
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Get an extra tax deduction this year if you have a mortgage! Pay your January mortgage payment in December. As long as your mortgage company posts the payment in December, you can claim the interest on this year's taxes rather than waiting until next year's tax return. In most cases, you'll only be paying it a few days earlier than you would have anyway.
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Need to save taxes for your business? Think ahead to try to advance deductions. I'd never advocate buying things for your business that you don't need. However, if you are planning on purchasing anything for your business in the near future, consider doing it in December rather than waiting until January or February.
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Do you have a home office? Do you use a completely segregated part of your house solely for a home-based business? If you do, you may be able to write-off part of your house expenses against your business income.
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Do you own a business (sole proprietorship, partnership, or corporation)? Put money away for retirement and save taxes now...set up a retirement plan for yourself and any employees you may have.
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How long should you keep receipts and other documents? Keep all your receipts. It is your burden to substantiate any and all deductions you take. I recommend keeping all paperwork for a minimum of seven years; although if you are able to keep them longer, definitely do so.
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Do you donate money to charities? Due to a recent tax law signed into law in August 2006, you must have a canceled check and/or an acknowledgment letter from the charity for any donation that you make--regardless of the amount. So, be sure to request those letters from the charities. Keep very good records!!
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If you regularly donate clothes to charitable organizations, be sure that they are in "good condition" or better, and that you receive a donation receipt. ALWAYS keep a VERY detailed list of each and every item donated, take a photograph, or do whatever you can do to substantiate the donation. NEVER leave clothes in those clothing bins--there is no way to prove your donation to the IRS and the donation will be disallowed.
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Is all money given to charities deductible as an itemized deduction? No. Political contributions are not deductible. Also, if you donate money and you receive something of value in return (such as a dinner or entertainment), your deductible donation is only the excess of your donation over the value of what was received. Finally, purchases of raffle tickets are not deductible.
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GIVE YOUR ACCOUNTANT AS MUCH INFORMATION AS POSSIBLE!
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Did you move? Did you get a new job? Was anyone born or did anyone die during the tax year? Were you married, divorced or separated?
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Did you buy a home? Did you refinance? Are you supporting anyone financially?
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Did you sell any stocks or bonds, or any other item?
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Did you give gifts to anyone? Do you have any foreign bank/brokerage accounts?
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Never withhold information...lack of information may cost you a deduction.
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Remember: Many regulations in the tax law have time limits/periods associated with them. Always tell your accountant about potential financial transactions that you are contemplating well in advance of the actual occurrence. Good tax planning can save a lot of money. If your accountant doesn't know about an event until after it occurs, there is no way that he or she can help you save money through tax planning.
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