Most of us already keep track of our itemized deductions, like mortgage interest, child care expenses, and charity deductions. But is there something that you’re missing that would lower your taxes? Here are a few tips for your consideration.
* Consider larger contributions to your retirement plans. After age 50, you allowed to make “catch up” contributions. Most people can contribute the amount of $5,500 per year (2013) to their traditional IRA or Roth IRA. If you’ve reached your 50th birthday by the end of the year, however, you can contribute up to $6,500 per year.
* Medical expenses must exceed 10% of your adjusted gross income making them harder to deduct. There are some things that you may not have considered when you are looking for medical expense deductions. For example; any major changes to your home for things such as; wheelchair ramps, widening doorways, swimming pools, installation of an elevator, and anything else that would have a medical purpose. When the improvements increase the value of your home, you can “only” deduct any amount that the cost of improvements exceeds the value it adds to your home.
*Did you pay foreign taxes? You may have paid a foreign tax and were not even aware of it. If you own an international mutual fund, the fund may have paid foreign taxes on your behalf. You may be able to take a credit or deduction on the foreign taxes that you paid.
* Do you own shares in a mutual fund? Often you pay capital gains taxes because the mutual fund sold assets even if you didn’t sell any shares of the fund. Be sure you aren’t paying the same tax on the same income twice. Also, make sure to enter the adjusted tax basis when you decide to sell the mutual fund shares.
* Do you use your home for business? There are many deductions you may be able to use if your home is used for your business. You may be able to deduct a portion of the costs of mortgage interest, utilities, maid service, and lawn care maintenance. If your clients come to your home business, the outside appearance may be equally important to your business.
* Do you have a Service animal? The initial cost and the expenses of care, training and upkeep are deductible as part of your medical expenses. However, you cannot deduct everyday expenses for your pets. A service animal may be for hearing or sight impairments or for other medical conditions or illnesses such as seizures or autism.
For more tax tips and all of your financial needs contact our office at (260) 497-9761 to schedule an appointment with our tax advisors.