Help Me Hank: Advice that can help during the stressful tax season
It's probably safe to say that no one enjoys doing their income tax returns, with the possible exception of professional accountants!
Each year, Help Me Hank provides a list of tax advice that might help you save extra money on your income taxes. Consider this advice a friendly reminder about opportunities to save money, you may need to do additional homework to see if you truly qualify for specific deductions.
Missed Deductions, Don't Leave Money on the Table
Each year, taxpayers should make sure they are taking every deduction possible to lower their tax bill. The experts at H&R Block say many people miss deductions and pay more taxes than necessary.
"About 20 percent of taxpayers actually miss out on the Earned Income Tax Credit each year," said Jennifer Owens, a tax expert at H&R Block.
The Earned Income Tax Credit (EITC) is for people with low-to-moderate income. They can qualify for about $6000 in tax credits. Other deductions tax payers miss include: education credits, state and sales taxes, job search expenses, gambling losses, and charitable deductions.
When you think of deductions, many of you probably think about your children, but if you care for elderly parents you might also be able to claim those expenses. In order to qualify, you would need to pay more than 50 percent of your parents living expenses. You can make that claim even if your parents do not live with you. If you are splitting those expenses with a sibling, you can both be eligible for deductions, use Form 2120 to figure out how much each sibling can write off.
Charitable Deductions: Proof, Proof, Proof!
If you are able to take charitable deductions, be sure to keep the one thing the IRS might ask for one day: proof! You will need to document all the donations your are claiming.
If you are going to donate non-cash goods, you will have to come up with a legitimate value to place on those items. Owens says there is a Salvation Army guide online that can help you determine how much many items are worth.
"That gives you kind of an idea if its in good condition or poor condition, how much you can actually claim when it comes to that charitable donation," Owens said.
She also advises that you take photos of the items you donate, which is even further proof should the IRS come calling.
It's important to have as much proof as possible because the IRS has great latitude during an audit.
"Essentially, the IRS could then disallow everything on the given form they're auditing," Owens said.
Running Out of Time? Don't Panic
If you end up running out of time in April to get your forms 100 percent complete, don't panic! You can easily request an extension with form 4868. The extension is automatic, you don't even have to come up with any excuses, like your dog ate your tax return. Just file the form, and you have until Oct.17 to get your paperwork in order. The extension deadline is Oct. 17 this year, because the April deadline has been pushed to Monday, April 18, due to a holiday in Washington, D.C. on April 15.
There is one important catch! If you estimate that you will owe money, you must send a check along with form 4868. Otherwise, you will have to pay penalties and interest when you do finally file your return.
Special section: Taxes 2016
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