How to Increase Your Tax Deductions

There are many ways to increase your tax deductions. I have mentioned only a few. It is best to start thinking about increasing your tax deductions at the beginning of the tax year. It is very important to keep all receipts and maintain your record keeping.

Instructions

Difficulty: Moderately Challenging

Things You’ll Need:

• Paper and Pencils

1. Start a Small Business. There are many deductions you can claim when you start a business. You should use schedule C for Small Business deductions.
2. Invest in Real Estate. You can deduct your repairs and other expenses on rental property.
3. Generally, you can contribute both to a Traditional IRA and a Roth IRA. You may be eligible to claim a credit for both the Traditional IRA and the Roth IRA according to your adjusted gross income.
4. Figure your retirement savings. Make sure your Accountant/CPA gives you credit for this saving.
5. Give Contributions to organizations. Do your homework first. Investigate background on organizations before donating large amounts, unless it is a well-known cause, i.e. United Way, Red Cross, etc.
6. Count your losses against your gains on stocks at end of the year. A stock that is losing, at the end of year, sell it and count it against your gains.
7. Figure your educational expenses. If you are in school, you may be able to claim a portion of your educational expenses. Generally, it is the Hope or Lifetime Learning credit.
8. Invest in a home, don't rent too long. Buying a home is a good investment. You can deduct most of your interest that you pay on your home mortgage. It varies with your adjusted gross income.

Tips & Warnings

• Starting a Small Business would be very beneficial and advantageous. If you have a loss on your business, you may be able to claim that loss.
• Investing in real Estate for rental property would be good. In my opinion, Real Estate should be one-third of your investment portfolio. It is a good solid investment.
• All of these tax deductions that I have mentioned are good to increase your tax deductions.
• Maintain your record keeping in case there is an audit from the IRS.