How to get your biggest tax deduction
The IRS says the money belongs to an estimated 1 million taxpayers who didn’t file 2013 returns.
Doubling up on your deductions can be a really smart move.
At tax time, you always want to pay as little in taxes as you can. Taking advantage of the best tax breaks available is vital in order to achieve that goal, and for most taxpayers, either the standard deduction or their itemized deductions will represent the biggest tax deduction they take on their returns. Yet many taxpayers don’t take full advantage of their right to choose either to itemize or to take the standard deduction. By using a simple strategy that involves doubling up on some itemized deductions, you might be able to squeeze more out of the biggest tax deduction available to you.
Don’t let your deductions go to waste
Every year, taxpayers have a choice. They can keep track of all the expenses they can deduct, such as mortgage interest, state and local taxes, and charitable contributions, and then itemize their deductions on IRS Form 1040’s Schedule A. Alternatively, they can do no extra work and simply take the standard deduction. For many taxpayers, the standard deduction is higher than what you’d be able to itemize anyway, and so there might not seem to be much reason to do anything else.
However, if you’re like many taxpayers, the amount you’d be able to claim in itemized deductions is relatively close to the standard deduction. From one angle, that means that the standard deduction isn’t really doing you much good, because even if it didn’t exist, you’d get a similar amount by itemizing. For those who have similar deductible expenses year in and year out, this is a recurring issue that limits tax savings.
Making better use of the standard deduction
Through smart tax planning, you can use the choice between standard and itemized deductions to your advantage. The key is that you get to deduct most expenses in the year in which you pay them, even if they’re for bills that might not be due until a future year. By “doubling up” and paying two years’ worth of expenses in a single tax year, you can take better advantage of standard and itemized deductions.
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