Finding tax deductions is the easy part. Keeping your records in order so you can claim them is the challenge. Common tax deductions cover expenses for moving, maintaining a home business, vehicle mileage and even magazine subscriptions. Tracking these deductions isn't difficult, but it does take discipline and commitment.
Everyone knows the old joke about keeping your tax-return-related receipts in a shoebox. But a shoebox is better than no box at all. Ideally, every time you incur an expense you are entitled to write off, you should file the receipt for that expense in a folder or envelope. One easy option is to utilize an accordion file. Label each slot of the file folder according to the type of deduction, for example, "Moving" or "Job Search." Every time you get a receipt slip it into the appropriate slot. Alternatively, you can establish a separate file folder or manila envelope for each deduction type.
You may be able to deduct mileage for work-related travel when you fie your return. Job search, medical appointment or volunteer activity travel may also be deductible. In any case, you need to start keeping tabs on mileage on January 1 of the tax year. When you file, you may need to include your total mileage for the year, as well as the number of miles for a given activity. Record the figures on your car's odometer at the start and end of every year. In the same notebook, Excel file or other tool, record your mileage at the start and end of every business trip or volunteer activity. You can also record mileage and maintenance expenses. At the end of the year, you will have every automobile-related expense at hand.
If you own a home-based business, you may be entitled to deduct some portion of your rent or house payment, as well as utility payments. The amount you can deduct is based on how much space in your home is devoted to your business. Collect your paid utility bills, or electronically file your online proof of payment, so your records are in one place when tax-filing time rolls around.
Checks and balances are important in bookkeeping-related matters. Filing receipts is fine, but you should also keep careful records in your check register. If an expense relates to a tax deduction, record not only the date, payee and amount, but also the reason for the expenditure, such as "Office Rent - 100 Jones Road, Suite 2." If you are ever audited by the Internal Revenue Service, such notations will enhance clarity.
- A List of What Can Be Written Off on Your Taxes
- Tax Write Offs for Homeowners
- Can I Average My Federal Taxes Over the Last 5 Yrs?
- How to Write a Letter to Have a Dismissed Bankruptcy Removed
- What Can I Write Off on a Settlement Statement for Taxes?
- Can You Depreciate a Furnace?
- How to Report a 1099 for a Deed in Lieu
- Can I Write Off a Psychologist Appointment on My Taxes?
- How to Compare Auto Refinancing
- What Can You Write Off on Your Investment House When You Sell?