For many Americans, tax season has passed and they have either written their check or are looking forward to receiving a refund. But take a piece of advice from a Fort Collins tax accountant: now is the time to be thinking about deductions. Trying to remember the expenses you may have had in the last year as you scramble to get ready to submit your taxes to your accountant is a no-win proposition. You’re bound to forget something. So, we encourage you to start thinking about them now.
These Things are Deductible? Who Knew!
As you are dutifully jotting down your tax deductions throughout the year, keep in mind these things, which many people are unaware of:
- Health insurance premiums. For most taxpayers, medical expenses have to exceed 10 percent of your adjusted gross income to be deducted. If you are self-employed and responsible for your own health insurance coverage, however, you might be able to deduct 100 percent of your premium cost.
- Sales tax. You are allowed to deduct sales tax or state income tax from your federal income tax return. If your state doesn’t have income tax, this can be a significant deduction. Even if your state does have an income tax, claiming the sales tax deduction may be to your advantage. This can be true if you’ve made a large purchase like a car.
- Childcare costs while volunteering. In order to encourage volunteering, the government will allow you to deduct the cost of a babysitter if you are using their services while you are volunteering for a recognized charity.
- Self-employed Social Security. If you are self-employed, you have to pay roughly 15 percent of your income for Social Security and Medicare. That amount would otherwise be split between you and an employer. The good news is that as your own employer, you get to deduct half from your taxes.
- Unusual business expenses. There are many things that you might not have thought of as “business-related expenses” but really are. For example, if you’re a lifeguard, you may be able to deduct the cost of sunscreen. Talk with your Fort Collins tax accountant about the specifics of your job.
These are just some of the lesser-known tax deductions. To determine all the deductions you’re entitled to, talk with us at Shaw & Associates, your Fort Collins tax accountants.