We’re all busy people so it’s easy to get distracted and before you know the tax filing deadline will be upon us. The mad dash at the end of tax season is something many of us have experienced all too often.
Instead of waiting until the last minute, start organizing your income and expenses documents right now. Do it while it’s still fresh in your mind so you don’t miss out on important tax deductions. Here are the top six tax-related expenses you should start tracking before the end of the year.
Source: Money - US News
The holidays are not only one of the busiest shopping seasons but it’s also the time of year when everyone opens up their pocketbooks to charities. If you’re able to itemize your deductions on a Schedule A, then start tracking your charitable donations right now.
Add up all the checks you’ve written and online payments you’ve sent to various charities and fundraisers. Non-cash donations you’ve give to the Salvation Army, Goodwill and other organizations can also be counted towards your taxes. Even out-of-pocket costs you incur for fundraisers can be deducted.
Source: CNN Money
Medical costs can eat up a large portion of your budget and this includes insurance premiums. This is why the IRS will give you a tax break on any medical expenses, or insurance premiums, that exceed 7.5% of your adjusted gross income. So start gathering up all of your prescription receipts and doctor visit days so you can maximize all the health-related tax deductions.
If you’re self-employed you’re allowed a separate health insurance tax deduction on top of any medical, dental and vision expenses you can deduction on Schedule A.
In addition to making last minute charitable donations, a lot of people tend to think about retirement contributions before the end of the year too. And with good reason. Depending on what type of retirement account you have, such as a 401K or Roth IRA, you could qualify for a myriad of tax deductions or credits.
One of the least-known tax credits includes the Saver’s Credit, which is given to any individual who makes less than $31,000 or a family who earn less than $62,000 annually. This credit can be as much as 50% of your entire contribution, up to a $4,000 max. So if you contribute $1,000 into an IRA you could qualify for $500 as a tax credit.
Did you travel a lot for work, or take on a part-time job as a delivery driver? These business travel miles can be deducted on your tax return. Even if you didn’t track all of your miles for each individual trip, there’s still time to start before the end of the year.
Plus, with apps like MileIQ you can cross-reference the days you were driving for business purposes and estimate the miles driven to and from each location. In 2016, the standard mileage rate was $0.54 per business miles driven, which can add up to quite a decent tax deduction throughout the year.
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As the cost of attending college continues to skyrocket, many of us are looking to online classes and short-term courses as a way of furthering our education. Even if you graduated from college a long time ago, you could still receive a tax deduction related to continuing education for a current job position, or lifetime learning in pursuit of getting a better job.
The Lifetime Learning credit is given to anyone who strives to improve their job skills and can be a credit of $2,000 per year for qualified education expenses. This tax credit phases out as your income level increases but doesn’t discriminate based on age.
Speaking of job expenses, if you incurred any costs related to searching for a new job you may qualify for a tax deduction. In the event you’re looking for a job in the same industry, you can claim expenses such as the following.
Driving to interviews
Cost of printing resumes
Employment agency fees
Subscriptions to organizations
Attending job fairs and industry conferences
Again, these expenses must exceed the 2% adjusted income threshold on your Schedule A. But they can really add up throughout the year, so now’s the best time to start tracking them so you don’t miss out.
Give yourself more time to organize your income and expense for tax season so you don’t end up missing out on any deductions by being in a hurry. You deserve to get all of the tax deductions and credits that you’re eligible for. By tracking these figures now you’ll be more than prepared when tax season rolls around.