Pay Deductible Expenses
Pay by check on or before December 31st and it’s counted when you release the check, no matter when it’s cashed. Pay by credit card and the expense counts when you sign the credit slip, not when you pay the credit card bill.
Review Medical Expenses
Medical expenses must generally exceed 10% of your gross income to help you. If you pass this 10% limit, most of your expenses will be deductible. Include fees paid to any licensed health care professional or organization. Most health insurance premiums are deductible and mileage to and from doctors, dentists, etc. Also, prescription drugs and medical supplies, but not over-the-counter remedies, or food supplements. If you have medical insurance, claim only the amounts you actually pay out of pocket.
Review Tax Payments
If this is a high income year for you, consider paying one extra installment of property tax. If you still owe state income tax, consider paying as much as you can in December.
Make Charitable Contributions
Go through cancelled checks. Look for cash or merchandise gift donations. Try to recall cash gifts at work or the front door. When you buy cookies or candy from youth groups and other charitable fund raisers, about 50% of what you spend is deductible, the other half is the value of the merchandise. If you would like to check if a particular organization is qualified charity click here to check the IRS data base. For a single gift of $250 or more, a receipt from the charity is a must. If you are audited later, your cancelled check alone will not be enough. Also, don’t forget the used items donated to Goodwill, Salvation Army, and other non-profit organizations. Don’t wait until January to clean out the garage, do it in December and see your tax savings in a couple of months when you file your return, rather than waiting another year to claim them. Call us for your free guide that helps you calculate the value of your used item (non-cash) donations. It has been our experience that most taxpayers under estimate these values by at least 60%.
Gather Investment Expenses
This includes purchases of investment books and publications, account fees on investments, and brokerage fees. Investment counseling and planning fees are also deductible.
Gather Special Transactions
Find all records for any special sale, purchase, or investment. For any real estate sale the settlement statements for the purchase and the sale of the property is crucial.
Gather Refinancing Documents
The official or final settlement statement is necessary to determine any deductions.
Review Business Expenses
Stock up on supplies now before the year ends. Review your business cards, stationery, and office supplies. Are all bills paid? Do you intend to buy new equipment? Buy in December (and have equipment in place and ready to use before year-end) and you get the tax savings now. Remember as stated in the first section above, under “Pay Deductible Expenses”, you can make you equipment purchase using a credit card, pay for it next year and take your equipment deduction now. Also, locate and total those health insurance premium costs because they are tax deductible if you are self-employed.
Review Rental Expenses
For landlords, are there any last-minute repairs or painting to do? Don’t forget to make a mileage log and total your driving for the property. As for rental income, a rent check received in December must be counted even if you don’t cash it until January.
Review Mileage Deductions
With business expenses, you may deduct all the related driving. For employees, driving must not be considered “commuting” miles to be deductible. If you are reimbursed by your employer, gather your mileage records and reimbursement amounts. You may have been under-reimbursed if your employer does not keep up with the current IRS reimbursement rates, as the rates change every year (sometimes twice a year!!!).
Gather Child Care Expenses
Credits are available for child care expenses while you work (or look for work). The full name, address, telephone number, and I.D. number or social security number of care provider are necessary to claim the credit.