Once again it is tax time, so we are here to help you maximize your net worth by minimizing your tax liability. A question that we often receive is “Should I itemize deductions on my tax return?” According to Government Accounting Office estimates, more than 2 million people overpay their taxes each year by not itemizing. Generally, you can save by itemizing—in fact, many people benefit from itemizing deductions when filing. Here are a few facts to help you decide if you should itemize to save:
According to the Internal Revenue Service, you should itemize if:
- You are married and filing a separate return and your spouse itemizes deductions;
- You are filing a tax return for a short tax year because of a change in your annual accounting period, or
- You are a nonresident or dual-status alien during the year. You are considered a dual-status alien if you were both a nonresident and resident alien during the year.
You may also benefit from itemizing your deductions on Schedule A (Form 1040) if you:
- Do not qualify for the standard deduction or the amount you can claim is limited;
- Had large uninsured medical and dental expenses during the year;
- Paid interest and taxes on your home;
- Had large unreimbursed employee business expenses or other miscellaneous deductions;
- Had large uninsured casualty or theft losses;
- Made large contributions to qualified charities, or
- Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled.
The following items can add up fast when itemizing, so be sure to keep accurate records of the following:
- Medical Expenses;
- Job Hunting Costs;
- Investment Expenses;
- Moving Expenses;
- State Sales Taxes on Purchases made for the Filing Year;
- Mortgage Interest;
- Points on Refinancing a Home Loan;
- Uninsured Casualty or Theft Losses;
- Real Estate Taxes;
- State Taxes Paid During the Year;
- Charitable Cash and Non-Cash Contributions;
- Investment Management Fees, and
- Tax Return Preparation Expenses.
These are only some of the most popular deductions that people claim. There are more deductions that can be itemized, so consider having a professional prepare your taxes. Remember tax return preparation is a miscellaneous itemized deduction!
At Henssler Financial Tax & Accounting Division we will be more than happy to help you make sense of your tax return since you have decided to itemize. For more information on itemizing deductions, please contact Henssler Financial Tax & Accounting Division at 770-426-9166 or e-mail us at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
