As is the case every year there are some changes in tax filing regulations and guidelines this year, including an increase in the estate tax exemption, and an increase of about 0.4 percent in the tax brackets. There is a $50 increase in the allowable personal exemption amount, making it $4,050. And in 2018 individuals and any small business have a few extra days to file - the deadline is April 18th, as the 15th is Emancipation Day in Washington DC.
Whether filing your own taxes or using one of the professional tax preparation services, individuals can benefit from these filing strategies and tips:
Itemize Contributions to Charity and Work Related Deductions
As long as you contributed to tax exempt charities, you can deduct up to 50 percent of those contributions, and you can also include any cars or other personal items donated, as well as any costs associated with volunteering. Don't overlook car expenses, education expenses and home office expenses when it comes to your job.
Rethink Your Filing Status
There may be some scenarios in which filing separately can be a more financially advantageous strategy, despite the fact that you are probably filing jointly if you are married. For example, filing separately may make more sense if you or your spouse has incurred a lot of medical expenses in the previous year.
Claiming a Dependent Care Credit
The current maximum credit is $3,000 for one person and $6,000 if you are caring for two people - don't forget to claim it if you are caring for your spouse or a child.
Medical Expenses
In 2017 a temporary exception for those aged over 65 allowed 7.5 percent of your income to be adjusted for medical expenses, rather than the usual 10 percent. Any of the tax preparation services should be able to advise you on this potentially confusing topic.
Rental Property Expense
Again, this area can potentially be confusing for many filers, but individuals filing taxes may be able to claim insurance, utilities and other expenses as a deduction if they have income from a rental property.
Self Employment Expenses
You need to make sure you are following the strict IRS guidelines for individuals with a home based business, but if that applies to you, you can potentially deduct for the cost of Internet, phone and computer as well as for your home office.
Tax Loss Harvesting
If you sell a losing investment in order to realize a capital loss, it is sometimes known as tax loss harvesting. It won't surprise you to learn that tax loss harvesting can also be quite complex and confusing and it's one of those tax areas where it pays a small business or an individual to get expert advice.
You also need to make sure that you aren't adversely affecting your long term investment goals, although this approach can potentially allow you to lower your tax liability and if you feel that this might be a good move, it's well worth looking into.
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