Monday, July 27, 2015

Don't Forgets Tax Advice

Thanks in large part to the internet, tips about what to do on your taxes and in financial matters are everywhere. Unfortunately, though, nobody ever tells you what not to do. Fortunately, we’re stepping up to the plate with some helpful advice on what you shouldn’t do.

Don’t Forget to Track Your Charitable Contributions                 

You do a good deed, like donating money or clothing to a charity, and you get a reward come tax-time. Simple, right? In reality though, charitable contributions and getting deductions for them is a little more complicated than that.

You absolutely need to be keeping careful, provable track of all of your contributions. If you make a donation, whether it’s in the form of cash or goods, ask for a receipt. Also make sure that you are only donating to legitimate organizations so that your donations are actually deduction-worthy.

Don’t Forget to Include Your State Refunds

If you received a state refund in any amount last year, then you need to include it as part of your income. This rule holds true only for state refunds; federal refunds need not be included.

The IRS knows if it paid you a state refund and, if so, how much. Thus, it’s very easy for it to tell if you neglect to include it in your income...and to penalize you for it. Neglecting to add this income in could even increase your chances of getting audited. Don’t make this common but potentially costly mistake.

Don’t Inflate Deductions

The temptation to be a little dishonest is very strong during tax time. For example, you might inflate the amount you supposedly donated to an organization, or you might claim your home office space is a little larger than it is to receive a larger deduction.

Those little lies don’t seem like a big deal if you don’t get caught, but remember, you’re playing a risky game by fibbing. Even little lies can discredit you, cause you to have to pay penalties, open you up to an audit, and even cause you legal trouble.

Resist the temptation to lie...even a little.

As any accountant can tell you, these aren’t the only things you shouldn’t do on your taxes. But, it’s a pretty good list to start with. In general, as long as you are honest and thorough at tax time, you should be okay.