deductions Archives - Williams Accounting & Consulting

January 27, 2018
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10 Overlooked Tax Deductions

Tax deductions and credits can save you money at tax time, but many taxpayers miss them because they don’t realize things they do in their everyday life can give them more money back.  One thing you should know is that tax deductions and credits help your tax situation in two different ways: Tax deductions can save you money by lowering your taxable income. Tax credits directly reduce the taxes you owe, and if you qualify, you can claim a credit whether you itemize your deductions are not. See if you can get a break on your taxes with these 10 overlooked tax deductions.

1. Tuition and Fees Deduction

Taxpayers taking a full course load and working toward a degree can receive education benefits through the American Opportunity Tax Credit for college expenses, but those who took even just one class to further their career may be able to take the tuition and fees deduction. With this credit, you can deduct up to $4,000 for tuition and fees, books and educational supplies for you, your spouse or dependents.

2. State and Sales Tax Deduction

Taxpayers can deduct state income taxes, but what about people who live in states that don’t have a state income tax? The state and local sales tax deduction is useful for those who don’t pay state income tax because they can deduct sales tax paid on purchases. Even people who live in states that pay state income tax can benefit if they paid more sales tax due to large purchases.

3. Mileage

From weekly doctor’s appointments to out-of-town visits with a specialist or for a procedure, the miles you log while driving your parents to meet their medical needs can be deducted. You can take that deduction if they qualify as your dependent. Keep a log as you’re running around. You can take 19 cents per mile driven for medical purposes in the 2017 tax year. If you’re staying overnight for a medical purpose, deduct $50 per night per person for lodging.

4. Job Searching

If you were looking for a job last year, you may be able to deduct costs related to your job search – even if you didn’t secure a new one. Job search expenses such as preparing and sending résumés, fees to placement agencies and even travel related to searching for a new job can be included.

5. Gambling Losses

Taxpayers who weren’t so lucky gambling last year should know that their losses can be deducted if they itemize their deductions. However, your amount of losses cannot surpass your winnings, which must be reported as taxable income. For example, if you have $2,000 in winnings and $4,000 in losses, your deduction is limited to $2,000. Make sure you have documentation such as receipts, tickets and other records to support your losses.

6. Charitable Contributions

Of course, you may know to estimate the value of items you or your parents donate to charity. But you also can include other out-of-pocket costs related to volunteering. If you or your parents bought ingredients to make meals for the homeless or elderly, or if you drove a personal vehicle while volunteering or assisting a charity, those and other costs can be deducted.

7. Home Improvements for Aging Adults

Investing in ramps for a wheelchair-bound parent, handrails and grab bars in the bathroom, or a stepless shower can be part of a deduction. It doesn’t matter if the improvements are in your home or your parents’ home, as long as it doesn’t add value to the house. The IRS says that the cost of the improvement is reduced by the increase in your property value. Other changes, such as widening doorways and hallways, lowering kitchen cabinets and installing lifts, also typically do not add value to houses.

 8. Student-Loan Interest

You can deduct interest only if you are legally required to repay the debt. But if parents pay back a child’s student loans, the IRS treats the transactions as if the money were given to the child, who then paid the debt. So, if the child is no longer claimed as a dependent, he or she can deduct up to $2,500 of student-loan interest paid by Mom and Dad each year. And he or she doesn’t have to itemize to use this money-saver. (Mom and Dad can’t claim the interest deduction even though they foot the bill because they are not liable for the debt.).

 9.Military Reservists’ Travel Expenses

Members of the National Guard or military reserve may write off the cost of travel to drills or meetings. To qualify, you must travel more than 100 miles from home and be away from home overnight. If you qualify, you can deduct the cost of lodging and half the cost of your meals, plus an allowance for driving your own car to get to and from drills. For 2017 travel, the rate is 53.5 cents a mile, plus what you paid for parking fees and tolls. You may claim this deduction even if you use the standard deduction rather than itemizing.

10.Child Care Credit

You can qualify for a tax credit worth between 20% and 35% of what you pay for child care while you work. But if your boss offers a child care reimbursement account—which allows you to pay for the child care with pretax dollars—that’s likely to be an even better deal. If you qualify for a 20% credit but are in the 25% tax bracket, for example, the reimbursement plan is the way to go. Not only does money run through a reimbursement account avoid federal income taxes, it also is protected from the 7.65% Social Security tax.

You can’t double dip. Expenses paid through a plan can’t also be used to generate the tax credit. But get this: Although only $5,000 in expenses can be paid through a tax-favored reimbursement account, up to $6,000 for the care of two or more children can qualify for the credit. So, if you run the maximum through a plan at work but spend even more for work-related child care, you can claim the credit on as much as $1,000 of additional expenses. That would cut your tax bill by at least $200.

If you have questions or comments regarding tax deductions, feel free to comment below or contact us direct so that we can assist you with cutting your tax bill by claiming all the tax write-offs you deserve.


January 27, 2018
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4 Reasons to File Your Taxes Early

If you’re used to filing taxes, you’re probably aware that they’re due sometime near mid-April. Typically, tax returns must be submitted by April 15th, but this year, you get a couple of days worth of leeway. That’s because April 15 falls on a Sunday, but since the following Monday is Emancipation Day — a Washington, D.C., holiday — filers get until April 17 to get their returns over to the IRS.
That said, you can submit your tax return as early as Jan. 29 this year, and it pays to aim for that deadline, or one shortly thereafter, even if it means putting in some extra effort in the coming weeks. Here’s why.

1. You’ll get your money sooner
An estimated 80% of tax filers get a refund each year, and not a small one, either. In fact, last year, the typical refund was $2,763 — not exactly pocket change. If you have outstanding bills to pay, a vacation you’re looking to fund, or just a general desire to get your hands on the cash that’s rightfully yours, then filing early is the best way to do just that.

Keep in mind, however, that if you’re planning to claim the Earned Income Tax Credit or the Additional Child Tax Credit, the earliest you can expect your tax refund is late February. Why? Because of high levels of fraud associated with these credits in particular, the IRS is required to withhold associated refunds longer. Furthermore, this restriction applies to your entire refund, even the portion of it having nothing to do with these credits. But if you’re not planning to claim the Earned Income Tax Credit or the Additional Child Tax, and you file your return electronically without errors, you can typically expect to get your money back within three weeks’ time.

2. You’ll give yourself more time to address an underpayment
Though most tax filers wind up with a refund each year, you may land in that rare but notable category of workers who end up owing money on their taxes. And if that’s the case, you may be in trouble, especially if your underpayment is sizable and your savings are nonexistent. On the other hand, if you give yourself two and a half months to come up with a plan for paying your tax debt, as opposed to waiting until the last minute, you stand a better chance of avoiding the penalties that come with paying the IRS late.


3. You can avoid tax fraud
Tax fraud is a major problem for filers of all ages, but believe it or not, filing your return early might actually help you avoid falling victim. What will typically happen is that a criminal will access your information, file a return in your name, and attempt to snatch your refund in the process. But if you file your return early enough, that’ll be a harder feat for someone to pull off.
See, the IRS has software that’s designed to flag duplicate returns, and so if it has one on file for you and someone else then submits a second one, it’s the fraudulent return that’ll get rejected. On the other hand, if a criminal beats you to the punch, it’ll be on you to get things sorted out, which could not only delay your refund but also constitute a major headache.

4. You want to lower your stress level
Let’s face it: The tax-filing process can be stressful to say the least, especially if your return is complicated and requires a lot of legwork (such as needing to calculate deductions or follow up on missing documentation). One final benefit of getting your return in early is having one less thing to worry about between now and mid-April. Once that return is out of your hands, you’ll be able to move forward and focus your efforts and mental energy elsewhere.
Though there are plenty of good reasons to file your taxes early this year, here’s one good reason not to: You’re missing key information that could compromise the accuracy of your return. While it’s helpful to get your taxes in ahead of schedule, if you don’t have the data needed to be precise, you’re better off waiting. Otherwise, you’ll increase your chances of getting audited, and that’s a whole other potential nightmare to contend with.