Its income tax time again. With the April 15th Deadline fast approaching you need to beware of these 9 common income tax mistakes as stated by Intuit the makers of Turbo-Tax.
1 - Not taking all of your deductions.
The 2 most common deductions missed are charitable deductions and the home office deduction. Many people underestimate the value of clothes and other items given to charity. Many taxpayers who are legally entitled to the home office deduction fail to take it for fear of being audited
2 – Not accounting for Reinvesting Mutual fund Dividends
Buying extra shares with reinvested dividends can affect your cost basis when you sell. Many taxpayers overpay the IRS because they don’t adjust the tax basis.
3 – Not claiming carryover items.
The two most common carryover many taxpayers miss are state and local income taxes paid with the prior year return and carryover capital losses.
4 – Not naming a beneficiary or naming wrong Beneficiaries to your IRA, 401k or other retirement plan.
If you fail to name a beneficiary then the money passes to your estate with unwanted tax consequences to your heirs.
5 – Not taking advantage of Matching employer contributions.
Many employees fail to invest in company sponsored retirement plans and loose out on matching contributions
6 – Failure to make estimated Quarterly Tax Payments.
Self Employed taxpayers are required to pay estimated quarterly payments to the IRS. Failure to do so may cause and underpayment penalty
7 – Poor planning in exercising stock options.
Taxpayers who exercise stock options then sell the underlying stock fail to anticipate and set aside money to pay the capital gains tax
8 – Not adjusting withholding when you change Jobs.
Taxpayers who change jobs for more money don’t always adjust their withholding to account for the higher pay and tax burden that goes with it.
9 - Contributing to a Roth IRA when your Income is too high.
Single taxpayers who earn over $110,000 or married Taxpayers who earn over $160,000 cannot contribute to a Roth IRA.
About the Author
Mike BigMak Makler Offers Financial Services (Life Insurance, Annuities and Mortgage Protection) in Florissant Missouri which is in North St. Louis County Missouri Just Across the Bridge from St. Charles Missouri and Alton IL
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Many people think about buying and selling property without thinking about real estate taxes. Before you buy property you should be sure that you look into the taxes. Depending on where you live, your taxes may be very low, very high, or somewhere in the middle. Every homeowner will pay different amounts of real estate taxes because they are based on the actual value of your home.
When you buy property you can expect to pay property taxes, you may pay taxes for the development that you live in, and you will probably pay school taxes. All of these taxes can range from a couple hundred to a couple thousand dollars each year based on the percentage of tax that you pay on the value of your home as well as on the worth of your home. For instance, you are going to pay more tax if you have a million dollar home when you live in the same area as someone who has a home that is worth $115,000 home. When you buy property you have to consider taxes as they will affect whether or not you can afford any given home.
If you want to sell property you need to take into consideration who will be able to afford the taxes. Many individuals that are selling their homes have to reduce the actual price of the home to accommodate for the fact that the real estate taxes in their area are so high. This is a drawback of living in an area where property taxes are very high. It can be hard to sell house when a seller wants to get top dollar for their home when they live in a high tax area, and generally the homeowner will have to drop the price or wait for the right buyer to come along, and in a buyer’s market this can take quite awhile!
If you are thinking of buying a house and you are afraid of how you will afford your real estate taxes each year, you should consider that your taxes can be paid out all year long. Most home buyers choose to have money put into an escrow all year long so that they don’t have to come up with a lump sum of money at the end of the year. Instead a dollar amount is added to your mortgage payment each month and that money is set aside in the escrow account. This money is then saved until tax time and the escrow management company pays out the taxes when the time comes, making it more affordable for you to pay your taxes and afford your home.
Caitlina Fuller is a freelance writer. If you want to sell property you need to take into consideration who will be able to afford the taxes. Many individuals that are selling their homes have to reduce the actual price of the home to accommodate for the fact that the real estate taxes in their area are so high. It can be hard to sell house when a seller wants to get top dollar for their home when they live in a high tax area, and generally the homeowner will have to drop the price or wait for the right buyer to come along, and in a buyer’s market this can take quite awhile!
