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10 Things You Didn't Tell Your Tax
Pro
People constantly gripe about paying too much tax and getting too much IRS
correspondence. For good reason.
We make mistakes. We don't have to.
The biggest source of errors and an avalanche of correspondence is taking a
dependent your 'ex' is also claiming. That and getting Social Security
numbers wrong. Let's see what else
is causing you
aggravation, shall we?
Tax season is the most intense, pressured time of the year. Your tax pro
doesn't have the time to follow up and pester you for all the deductions -
and all income. They can't dig deeper into your records or memory. It's up
to you.
The top 10 things you omit:
- Auto Registration - The annual fee paid on each
car. Note: If your state charges a fee based on anything besides the value
of the vehicle, that part of the fee is not deductible.
- Loan Refinances - Often, points, interest or
property tax adjustments may be deductible. When refinancing for
improvements, remodeling or repairs, you may be able to deduct all the
points paid on that new loan. To qualify, you must write a check for the
points, not have it come out of the loan. You didn't? You may still deduct
them over the term of the loan. Incidentally, if you are on the refinance
merry-go-round, constantly getting lower interest rates, the points from
the last loan, being deducted over 30 years, can all be deducted when you
pay off that previous loan.
- Non-Cash Contributions- You've been dropping stuff
off at Goodwill, Salvation Army, the Disabled Vets all year long. You've
got a stack of receipts for those clothes, furniture and appliances.
Documented properly, they could be worth thousands as a deduction.
Without receipts, don't deduct more than $500.00.
- Charitable Contributions - Working for a company
with other people, you are constantly pressed to sponsor friends in charity
races, to buy things their children are selling as school fundraisers, to
make automatic payroll deductions to the United Way or other charity. One
reader came up with a great idea.
Look at
your utility bills. They often contain forced contributions to funds
for seniors or the handicapped. Check into your utility company's rules.
Those contributions might be deductible.
Incidentally, if you realize that you didn't make any donations last year,
but want to start this year right, here are some places that can always use
your help:
TaxMama's favorite
charities
- Red
Cross
- Save the Children
- World Vision
- Heifer International
- Galilean Home
Ministries
- Children and Dependents- You had a baby, or adopted
a child? Tell your tax pro. Did you take care of anyone? A parent, or an
ailing relative? Perhaps you have a dependent. Did you make a new
arrangement with your 'ex'? Is s/he getting the child this year? One last word about
kids - did yours leave the nest? Please, do tell your tax pro. Don't wait
for that letter from IRS asking why you took your child's exemption - and
so did they.
- Marriage or Divorce
- Things in your life change all the time. You take them in stride, or you
seek therapy. You know your status. Share that information with your tax
pro. The alimony you received is taxable. The alimony paid is deductible.
- Speaking of Therapy and Medical - While most people
don't have enough medical expenses to itemize, sometimes, when seeing a
therapist, or getting braces, or in-home care after an operation, or.
possibly, you have medical expenses adding up to deductible amounts. You're
so used to being told, "No, too low!" that you don't even bring it up
anymore. Do tell your tax pro.
- Unemployment Income - Often, by the time you see
your tax pro, you've forgotten that you ever were out of work. Stop and
think, while you're getting ready for your tax appointment. What did I do
all last year?
- Stock Sales - You took a beating on stock you
dumped early in the year. You were furious. Now, a year later, you've
totally forgotten. IRS didn't. Don't report it - you'll get a bill for tax
on the full amount of the sale. And what about those stock options you finally exercised?
- Pension or IRA
draws - You don't normally use that money. You've forgotten by the
time you come in for your appointment. It's taxable - and may even have
penalties.
Did I say 10 things? Well, there's one more biggie.
- Your Address - Did you move? Your refunds may get
held up. Tax agency correspondence may get lost.
Keep this list next to you while getting ready for your tax appointment.
Help yourself make your tax return more accurate. Reduce, or eliminate the
letters from IRS. This may even result in lower taxes.
» One last tip:
Make an appointment after tax season for a tax strategy
meeting. You don't need to be rich to save tax dollars. Just smart.
My motto?
See your tax pro twice a year.
P.S. If you don't already have a good tax professional, call an Enrolled Agent.
You can find one close to you at NAEA, the National
Association of Enrolled Agents.
Bio: Eva Rosenberg, EA, writes the Internet's popular weekly Ask TaxMama column on TaxMama.com. With a
tax practice spanning the globe, she's faced just about any tax question
you can imagine.
A popular columnist, writer and speaker, Eva does a
great 'Stand-Up Tax' routine for seminars and workshops that's both funny
and informative.
Copyright ©Eva Rosenberg 2003
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