How to Find Out About Tax Deductions

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By Janet Ford
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How to Find Out About Tax Deductions

Itemizing your income tax is a great way to save on how much you pay in each year. It can also help you to qualify for the earned income credit if your income meets the guidelines provided by the IRS. One way of doing this is by using tax deductions. Tax deductions are subtracted from your gross annual income so the more tax deductions you have, the lower your income shows up as. This can put you into a lower tax bracket and may even earn you a tax refund. Below are some ways to find out about tax deductions.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

Receipts, when possible

Step 1

Make an appointment with a qualified accountant. Do this prior to the new tax year starting or just after you choose to start a new business venture, particularly if you will be self employed. They can give you advice tailor made for your individual situation. Gather a list from them of what types of things you can use for tax deductions and what types of records you will need to retain to use them.
Step 2

Ask others who are in your profession if they have found any different things to use as tax deductions than what you were told. Brainstorming together will be beneficial to both of you. Finding out about tax deductions may make for the most profitable business lunch you have all year.
Step 3

Look up information on the internet. You'll be amazed at how fast you can gather this sort of information. Use proper search such as "home office tax deductions" or "actress tax deductions" or "writer tax deductions" to get the best results. You may even consider asking about tax deductions in some forums that are specific to your area of work.
Step 4

Write down each possible tax deduction idea as you go. Keep them in one place. Keep in mind that you should always verify these possible tax deductions with your tax professional. Just because someone else was able to use them does not mean they will apply to you. Example: Michigan allows you to deduct property taxes but some other states do not.
Step 5

Keep receipts on everything, even if you're unsure if they can be used for tax deductions. Your accountant can sort it out. Staple a note for what it was from if the receipt is not clear enough or you may lose the opportunity to use it as a tax deduction. Keep them all in one place. A manila envelope or maybe a fire safe box. Your tax deductions are important, treat them with care! And retain them for 7 years in the case of an IRS audit later. Clearly state the year they are from on the container you are using.