"I normally just use (insert generic tax software here)." This is the typical response I receive when I ask someone who they have doing their taxes. For some, this is perfectly fine; If your wages have already had taxes withheld, you have no dependents and nothing to itemize, you're probably receiving the best refund you can from that generic tax software. However, if your tax situation is not that simple, you might be missing out on valuable deductions because you're not utilizing the expertise of a Tax Professional. The following are just a few of the many deductions that you may not be aware you could be writing off (and generic tax software probably won't tell you about).
1. Hobby Related Expenses
So, you're crafty, and it turns out you're pretty good at it. You decide to sell your wares on Etsy, or maybe just to some friends and acquaintances. If you have generated revenue from your hobbies, you may be eligible to deduct the cost of those hobbies on your taxes. This deduction is for taxpayers that are generating money from their hobby, but do not consider their hobby to be a business. The IRS has special rules and qualifications to distinguish businesses from hobbies that a Tax Professional can interview you about to determine just how much of your crafting materials you can write off.
2. Casualty or Theft Losses
According to Rain Hughes, CFP EA, "A casualty is the damage, destruction or loss of property resulting from an identifiable event that is sudden, unexpected or unusual." While it may seem obvious that there are going to be accommodations made for someone who experienced a loss due to a tornado or earthquake, what about when that punk kid from across the street vandalizes your garage? If the incident meets certain criteria, you can write off the cost of cleaning it up. A Tax Professional can help you to understand what you can write off, and to what extent.
You know when you take all that old stuff to Goodwill and they ask you if you want a receipt? That's because technically, you relinquishing your old junk to them counts as a charitable donation, which you can write off. The same is true for donations to your church, or other charities that you may give cash or non-cash donations to throughout the year. As with all deductions, there are limitations to the benefit you can take, but a Tax Professional can help you understand how to maximize the benefits of donations you were going to make anyway.
4. Job Search Expenses
If your job search aligns with certain rules, you can write off costs associated with that job search. Examples of these types of expenses include fees paid to an agency to assist you in finding a job, or the price of sending out your resume, and are not contingent on you being hired.
5. Tax Preparation Fees
Many people believe that Tax Professional fees are too expensive to be beneficial, but what they may not know is the fees you pay can be deducted from your taxes.
This is just a small sampling of the items that you may be eligible to deduct from your taxes, which could have a significant impact on your tax liability. Most consumer use software for tax preparation does not ask you, the taxpayer, enough questions to fully understand the deductions that you are eligible for. However, a Tax Professional knows the laws, knows the rules, and knows how they can benefit their clients.
Is it time to ditch your software for a real, live Tax Professional? Canavan Financial Group is always accepting new clients. Call 303-284-1096 or email firstname.lastname@example.org to schedule an appointment.