No matter the time of the year, it never hurts to start sifting through your drawers and records for potential tax breaks you may be eligible for when the next tax season rolls around.
Like all tax planning, searching for possible deductions for your IRS tax returns is best done early on, for multiple reasons. For one, you can save yourself from racing around at the last minute to collect the information, and two, you can get a jumpstart on running the numbers by your accountant to ensure you have covered all your bases. Additionally, you can catch errors before you file.
While getting a head start on your deduction claims is helpful, it can be detrimental when you have not done your homework and you miss those errors. Intentionally claiming the wrong deductions or reporting them incorrectly can land you in hot water if you are not careful.
Taxpayers tend to make mistakes with the following common deductions:
Personal business expenses - Sole proprietors, small business owners, and entrepreneurs of any kind are especially at risk for making errors with business expenses. These deductions can be gold when you are a business owner. However, if you push your luck and bend the truth even the slightest, your actions look questionable. A typical example is when those who work from home try and claim more than the allowed percentage of their home as a write-off.
Gambling losses – Most gambling taxpayers are happy to learn they can actually deduct their losses as long as they itemize the deductions. Still, it is important to note that the amount of those losses are not to exceed the winnings. Those winnings must also be be reported as taxable income.
Tuition and educational expenses – Even those who take just a single class to further their education or career may be eligible for special tuition and educational fee deductions. There are often various tax credits and benefits you can claim if you are a taxpayer who falls under this category. Just make sure you are claiming these deductions correctly to avoid any issues with the IRS, and be aware that some credits expire, so you may not be able to claim them after a certain period of time.
Job search related expenses – Everything from supply purchases to create resumes to travel expenses that resulted from the time you spent hitting the pavement for that new position can usually be deducted come tax season. However, like other business-related expenses, it is crucial to itemize and be able to furnish proof of such expenses with legible receipts or invoices. Otherwise, auditors might see some of these write-offs as questionable.
Taxpayers can take advantage of a wealth of deductions for their returns, but in order to avoid any conflict with the IRS, correct filing is a must. If you find yourself running into issues with the IRS regarding your personal or business taxes, you need to speak with a knowledgeable Cook County tax law attorney before the situation gets worse. Call the Law Offices of Eric G. Zelazny today at708-888-2299 for a special consultation.