Tax season has begun, and while you may think it’s too late to do anything that can impact your 2014 taxes, that’s not the case. Even now you still can maximize your tax savings and perhaps your tax refund.
What’s the secret? Digging through your records. The more details you have saved from your purchases, the more deductions and expenses you potentially can generate to reduce your taxes.
What should you be looking for?
1. On a personal level, you can deduct medical expenses, sales taxes on some large personal purchases, such as vehicles, donations, education costs, investment expenses, and dependent care costs.
2. You still have time to increase your donation deductions. Gather your receipts for non-cash donations, such as the clothing and household goods you donated to thrift shops. Instead of simply deducting $25 per bag or $50 per box, itemize your donations with a tool like TurboTax’s® ItsDeductible.com to find acceptable fair market values to use in your tax return.
3. Did you do a lot of volunteer work in 2014? Collect your receipts for out-of-pocket expenses relating to those activities. Make a record of your mileage driven during these activities. Then, contact the charities or religious organizations, and request receipts for those costs and the mileage.
4. If you made monetary donations to any organization of $250 or more, be sure to get written receipts now, before filing your tax return.
5. You can make an IRA contribution until April 15. Your contribution amount will depend on four things: your age, earned income, adjusted gross income, and whether you or your spouse are covered by a retirement plan at work. The general contribution is $5,500. If you are age 50 or over, it’s $6,500.
If you’re a business owner…
6. Make a retirement contribution, based on your business profits or your wages from your corporation. Some plans have a contribution deadline of April 15, others Dec. 31, with an employer matching until the timely tax return is filed. You can create and fund a plan up until you file your business tax return or Oct. 15, whichever comes first.
7. Print out all of your 2014 credit card statements, and circle anything that might be deductible as a business or personal expense. Business owners must establish costs for merchandise, supplies, travel, entertainment and education. Check your online bank accounts, including PayPal and any other way you are paid, to find potential business expenses.
If you have had any major changes in your life during the year, consider consulting with a tax professional, who can offer insight into steps you can still take to reduce your taxes for last year.
Each year brings new challenges, but you can meet them if you do some planning.
Eva Rosenberg, EA is the publisher of TaxMama.com ®, where your tax questions are answered. She is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches terrific courses that might help individuals and small businesses at CPE Link.