It's time to gather up those receipts

It’s income tax time again, Amer­i­cans: time to gather up those receipts, get out those tax forms, sharpen up that pen­cil, and stab your­self in the aorta. — Dave Barry Yes folks. It’s that time of the year. For many, this is a time of antic­i­pa­tion, as they wait with hope­ful antic­i­pa­tion that they will be one of many who will actu­ally receive a refund. For oth­ers, a time of mourn­ing as the news comes that they still owe more taxes to Uncle Sam. With all the debate swirling in the air of late about the “need” our gov­ern­ment has for more rev­enue (i.e. Taxes), I still con­sider it a rare species that hopes to send as much as pos­si­ble to Uncle Sam to help the cause. With that in mind, gather your receipts and tax forms, step away from the sharp­ened pen­cil and con­sider these tips and deduc­tions to help lighten your mood (and maybe your tax bill) this tax sea­son. • Con­sider using an actual tax pro­fes­sional. The stress of prepar­ing your own taxes alone can be a real drag. While inex­pen­sive ser­vices or tax prep soft­ware may be appro­pri­ate for very sim­ple returns or some who already has a good under­stand­ing of tax prepa­ra­tion, most Amer­i­cans would ben­e­fit from the ser­vices of an expe­ri­enced tax pro­fes­sional. An expe­ri­enced pro­fes­sional can iden­tify poten­tial deduc­tions based on your sit­u­a­tion and can rec­om­mend prac­ti­cal ways to decrease your tax bill next year, not to men­tion the ben­e­fits of hand­ing the prepa­ra­tion bur­den over to some­one else. Ask a trusted advi­sor, friend or men­tor for a rec­om­men­da­tion. Look for some­one who has expe­ri­ence prepar­ing taxes for oth­ers in your phase of life and career. • Use an orga­nizer to keep things straight. While some have a seem­ingly nat­ural knack for keep­ing things straight and orga­nized, the rest of us could use a lit­tle help col­lect­ing our doc­u­ments. There are many orga­niz­ers avail­able at office sup­plies stores, online or from your tax pro­fes­sional, but a sim­ple manila enve­lope will work fine for col­lect­ing those forms and receipts to hand to your tax pro­fes­sional. If you are self-employed, cre­ate a folder today to use to col­lect your receipts over the next year and save your­self the stress of expense receipt hunt­ing next year. Keep­ing every­thing together from the begin­ning will help keep the stress level down come tax time. • Deduct your Invest­ment Fees and Expenses. If over the course of the year you incur trad­ing fees or advi­sory fees from an invest­ment pro­fes­sional, these may be tax deductible. While cer­tain guide­lines do apply, this is a com­mon deduc­tion that is missed by investors year after year. • Deduct your Pet. While most pet own­ers can­not deduct pet expenses there are cer­tain sit­u­a­tions that may allow deduc­tions. For instance, expenses for a fos­ter pet or a med­ical deduc­tion for a ser­vice pet may apply. • Claim your best friend as a depen­dent. OK, this will not apply for most peo­ple, but in some sit­u­a­tions you can reduce your tax­able income by claim­ing a non-relative as a depen­dent. To claim a non­rel­a­tive as a depen­dent, he or she had to live in your home for the full tax year and make less than $3,800 in gross income dur­ing that time. You also gen­er­ally must pro­vide more than half of the person’s finan­cial sup­port, and he or she can’t be claimed as a depen­dent by any­one else. RC Arse­neau is a Cer­ti­fied Finan­cial Plan­ner and lives with his fam­ily in Delaware. Please sub­mit any ques­tions or topic requests to AskRc@mail.com. The infor­ma­tion and opin­ions in this col­umn are pro­vided only for edu­ca­tional and enter­tain­ment pur­poses. Any ref­er­ence to a finan­cial prod­uct or strat­egy is not to be con­sid­ered an endorse­ment or rec­om­men­da­tion. The infor­ma­tion is of a gen­eral nature only and does not take into account your indi­vid­ual objec­tives, finan­cial sit­u­a­tion or needs. It should not be used, relied upon, or treated as a sub­sti­tute for spe­cific pro­fes­sional finan­cial, legal or tax advice. Invest­ment Per­for­mance may vary due to tim­ing and expenses. Rc rec­om­mends that you obtain your own inde­pen­dent pro­fes­sional advice before mak­ing any deci­sion in rela­tion to your par­tic­u­lar require­ments or circumstances.

Posted by Halley Miller on Mar 5 2013. You can follow any responses to this entry through the RSS Feed. Comments can be made below.