Get Started Get your financial paperwork for the year in a nice, neat pile. You’ve calculated your how much your gross income was for the year. Now you need to figure out if you have any deductions available, if they're legitimate deductions, and how much they can save you.
Here are some of the standard deductions you can claim on your taxes:
• Interest on your home loan: That’s right the interest your lending institution assessed on your home loan for the tax year can be included on your taxes as a deduction.
• Charitable Donations: If you’ve made any donations to charity over the taxable year you can claim those donations as deductions on your tax return. If you’ve donated some clothes to the Salvation Army it really isn’t worth bothering to claim them as deductions. You really should only claim charitable donations if you donated more than $500 for the year. To get the deduction for charitable donations you should have receipts or a written statement from a charity that you did make donation and the amount of the donation. This is very important if you made any donation over $500.
• Medical expenses: If you had a large amount of medical expenses for the taxable year you can claim some of that total as a tax deduction. Medical expenses allowable for deductions include any doctor visit, hospital stay, or prescription drugs. Non allowable medical expenses include anything that is considered cosmetic medical procedures. A good rule of thumb to follow is that if your insurance company doesn’t cover a procedure, you shouldn’t claim it as a
deduction.
Small Business Tax:
While a small business owner or independent contractor can claim any of the above
deductions, there are some specific deductions that apply to self run businesses:
• If you operate your business out of your home and you can prove that part of
your home is used as your primary place of business then you can write off part of
your property tax. Even if you rent your home you can claim part of your rent as
a deduction.
• Interest on business loans can be claimed; again you must prove that the loan is
applied to your business.
• Travel expenses that pertain to business can be written off. If your vehicle is
used for business, especially if you are a private contractor, you can write off gas
and maintenance on the vehicle. Save all of your receipts.
• Equipment, and office supplies specific to your business are eligible. Be careful
on this one, certain expenses are considered legitimate and others aren’t. A new
truck to expand your business is acceptable. A new car for yourself does not,
even if you claim it is good PR because it shows you’re successful.
• You can also write off insurance premiums related directly to your business.
Confusing? If all of this is still way over your head, I reccomend working with a reliable account, CPA, or tax preperation company. Don't take a tax responsibility all on your own if you don't have to.