Stock Up Deductions Now to Save Later
By Shannon M. Medisky
Ever sit down to do your taxes or hand everything over to your tax preparer only to wish you’d done a better job of tracking all of those potential deductions that could have whittled down your tax liability? Stop wishing it and stop wondering how much you could have saved this very instant by taking charge now for the sake of next year. The beginning of the new calendar year is the ideal time to start prepping for your yearly visit with Uncle Sam, and here’s exactly what to do, what to keep track of and how to manage it.
Unfortunately, many people simply throw potentially and perfectly good deductions away because they either 1) don’t think they’ll add up to much savings, or 2) can’t seem to manage to hang on to all those little receipts and papers necessary to substantiate the deductions. If you fall into the first camp, wait a minute! Or actually, wait a year because there’s no possible way for you to know if you can take advantage without first mindfully keeping track. You’d be surprised how quickly those little copay costs and charitable donations, for example, really add up. Do yourself and your bottom line a favor and start saving those receipts now so you can at least poise and prepare yourself to take advantage later.
If, on the other, it’s the sheer task of accumulating said papers and receipts that seems like a daunting task, take heart because there’s sure-fire ways to help ensure each and every one gets safely tucked away for tax time. The key is to establish a routine and stick to it. Every time you visit a doctor’s office, pharmacy or make any other health-related purchase, put the receipt in the same place each and every time inside your wallet or purse. At home, I like to keep things simple. At the beginning of each year, I grab two new large manila envelopes and label one “donations” and one “health expenses” and I keep them inside my coat closet for easy access. Each time a donation or a payment is made, the receipt moves from my wallet to the appropriate envelope as soon as I arrive home. When tax time comes around, all the receipts are already gathered for me and the envelopes serve double-duty as they then store everything neatly inside my file cabinet once my taxes are filed should I ever need them.
Additionally, TurboTax offers an easy-to-use program that will help organize, track and even help assign value to all your charitable donations. It’s Deductible is completely free to use throughout the year and, should you opt to use TurboTax to actually complete and file your taxes, all of your donation information from throughout the previous year can be easily imported with just a click of the mouse.
As for health-related deductions, many people may be simply overlooking purchases and expenses that may actually be deductible. For more information about what exactly is and isn’t deductible, check out my feature article on the topic, Take the Ow! Out of Taxes Now: How to Plan for and Increase Your Medical Deductions.
Photo credit: Paul Worthington
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