When preparing your taxes, how do you determine whether to use standard deductions or itemize them? Some tax preparers advise itemized deductions for those who are single and own no property, but general rules may not be applicable to your specific situation. Choosing a Long Island CPA who takes each client’s case on an individual basis is the ideal way to get the full value of your deductions, but before tax time, it’s worth looking at factors that influence this important decision.
Itemized deductions are a sound choice for most people who own a home and have a mortgage. Ownership is not the sole determining factor in deciding whether to optimize, though. This list of qualifying expenses will give you an idea of what to ask your accountant about when you set up a meeting. The items here include both limited and unlimited deductions, each of which is noted.
Medical expenses – This limited deduction is crucial for any family that has incurred medical expenses that were not covered or reimbursed by an insurance provider. If you carry a high deductible on your medical insurance, you may be able to claim a significant amount of your medical costs as a deduction.
Taxes – The IRS only expects you to pay taxes once and does not tax other tax payments. The payments you have made toward real estate taxes, property tax, sales tax, business-related taxes, and state income tax are an unlimited deduction on your tax returns.
Mortgage interest – Depending on the size and scope of your mortgage, you may be able to claim interest paid on it as a deduction. This category also includes interest you may have paid to buy your home as well as any interest on mortgage payments.
Investment interest – As with mortgage interest, the interest you pay to invest in financial investment property may be worth going through the itemized deduction process. Part of the CPA services an accounting firm offers is going through your investment portfolio to assess whether your interest paid on stocks, bonds, and mutual funds falls into this type of limited deduction.
Charitable contributions – For philanthropic business owners and generous donors, using charitable contributions for itemized deductions is especially important. To qualify, donations must go to a not-for-profit organization, a designation that includes donations to public school systems, many political organizations, religious institutions, and traditional charities.
Estate taxes – Payment of taxes assessed on earned income are not taxable again and should be itemized as a deduction.
Gambling losses – For those who have incurred gambling losses, itemizing these expenses as a deduction can ease financial burdens. Because deducting losses is limited based on money earned from gambling winnings, talk to your Long Island CPA before making any tax decisions.
Job-related expenses – If you have been on the hunt for a new position, you may be able to claim costs related to your job search. While these expenses are limited, they can help defray the cost of job-related education, travel, professional dues, uniforms, and training.
Tax preparation – The expense of having a qualified accountant prepare your taxes is itself a tax-deductible cost.
This list is only a partial one, and it’s always advisable to ask your CPA about specific expenses. Working with a Long Island CPA who is available ensures that you get the most up to date advice on tax deductions, investments, and every aspect of your financial planning.
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