With the sweeping changes in tax laws for 2013, there is a lot to watch out for when you file your return.
One area where taxpayers can be particularly vulnerable is with charitable contributions. The IRS is double checking the validity of those contributions to make sure charities have IRS-exempt status.
This Website Is For Financial Professionals Only
You also may be underestimating the value of those old clothes you gave away.
Now, there’s a software program that shows you how much you should claim for clothing, household items, and furniture given in good condition. You may be able to deduct more than you thought.
Make sure your tax ID number is correct. The IRS stopped putting your social security number on package labels because of privacy concerns and the tax ID number is how the IRS links your tax information to you.
Be sure to account for reinvestment of mutual fund dividends, which is counted for tax purposes as a new purchase of shares.
Those reinvested dividends also increase your cost basis when calculating capital gains on sales.
Don’t forget to carry over unused tax losses on your return. You can deduct up to $3000 against ordinary income if your losses have exceeded your gains.
Make sure not to exceed income levels for full Roth IRA contributions. Doing so may incur a 6% penalty.
Health insurance premiums are also tax deductible and are often an overlooked deduction item.
There are also mileage deductions for work done for charities and also for medical purposes.
Especially if you are doing your taxes yourself, you’ll want to take note of the changes for 2013