We’re quickly approaching the end of the year, which means it’s time for holiday festivities, gift-giving and getting ready for another tax season. There are several tax write-offs you may not be aware of that can make a difference on next year’s tax return. The following is a list of tax deductions and charitable giving strategies that can help you save money in the upcoming year.
Little things that we give and do for charitable organizations are often overlooked but can add up substantially by the end of the year. Everything from driving your vehicle for charity events to buying ingredients for a bake sale that benefited a nonprofit can be deducted. Make sure to keep all receipts and ask for documentation from groups to which you donated more than $250.
Avoiding Gift Tax
If you have a substantial amount of money you would like to gift to family members, it’s important to understand how much you can give without paying federal gift tax. You can give individuals up to $14,000 each in 2015 without you or the recipients owing income tax on the gifts. Whether you have a large estate or a limited amount of wealth, it’s important to understand exactly what’s involved in trust and estate planning.
If you’re an entrepreneur, there are several deductions you may be able to take. With a deduction of $5 per square foot up to 300 square feet, you can deduct the work area of your home as long as it’s used exclusively for your business on a regular basis. Health insurance also can be claimed if you’re self-employed. This can include premiums for yourself, your spouse and any children. Out-of-pocket medical expenses can be included also.
Child Care Credit
A credit is different than a deduction since it actually reduces your tax bill dollar for dollar. It’s possible to qualify for tax credits that are worth between 20 and 35 percent of what you pay for child care. If your company offers a reimbursement plan, that may be a better deal to consider. Just make sure you don’t double dip by having expenses paid through a plan that also is being used to generate a tax credit.
Lifetime Learning Credits
A lifetime learning credit can be used to offset the price of a college education. It’s not just for your children. These credits can be claimed for you or your spouse. These credits are worth up to $2,000 per year and aren’t limited to the initial four years of college. It’s based on 20 percent of up to $10,000 that is spent on post-secondary classes that are part of improving job skills. There are income limits, however, for couples and individuals.
It’s important to learn how to save the most money for your family’s future. For more information about estate planning and how taxes are part of the financial picture, contact Snyder Law to schedule a Family Estate Planning Session.
Disclaimer: The information contained in this blog should not constitute legal advice. Please consult an attorney in your local area for more specific information about these topics. The information contained in this blog should not be considered a solicitation nor is it an attempt to conduct business in any other state outside of California.