Avoid Future Tax Debt With These Deductions

July 4, 2012 by  Filed under: Taxes 

If you’re struggling with tax debt, it could be for a variety of reasons. Sometimes, it’s an honest mistake that wasn’t caught by you or a CPA, but found by the IRS instead, that lands you in a bad situation. In other cases, tax debt may fall upon your shoulders because of difficult financial circumstances.

However, nothing is worse than facing a challenging tax debt burden when you could have deducted many expenses, and lightened your burden from the beginning! Don’t let this be your story this time around! Know about these major deductions, and you won’t have to be going through the debt negotiation process with the IRS.

Essential Knowledge

Talk to a trusted CPA or tax attorney to be sure you get all of the deductions that apply to you. However, this list should give you a few things to consider before you pay your CPA a visit. You might qualify for receiving these deductions:

  • Disaster Relief Area. Do you live in an area that was declared a natural disaster area at any point during the tax year? If you do (or if you have property in such an area), you may be eligible to receive a federal tax deduction for any damages endured.
  • Health insurance premiums. If you’re paying your own health insurance premiums, then they aren’t being automatically deducted – a benefit that your W2 friends already enjoy. For independent contractors, deducting these premiums is especially important!
  • Education Expenses. Are you paying student loans? If so, did you know that the insurance you pay on those loans can be deducted in your federal income tax? And, that’s not all! There are plenty of other deductions related to student loans and education expenses that you can deduct. Talk with your CPA to find out more!
  • Child/Dependent Care Credit. This one isn’t even a deduction… it’s a credit – even better! While a deduction is money you don’t pay taxes on, a credit is money in the pocket. You might be eligible for this credit
  • IRA Deductions. If you are planning for your retirement by making payments into an IRA account, your benefits are two-fold. One, you have savings for the future, two, you don’t have to pay taxes on that money right now! You can deduct up to $5,000 per year this way. The ceiling on that figure only rises for those over 60.

Taking advantage of all the tax deductions you can greatly reduces the chances of having to go through debt negotiation with the IRS anytime in the future! After all, the more deductions you have, the fewer taxes you pay, and the less chance you’ll incur any tax debt!

The Lee Law Firm aims to provide local residents with high quality legal representation at affordable rates. Their attorneys specialize in all aspects of tax debt negotiations. As Dallas tax debt lawyers, the Lee Law Firm attorneys understand the pressures their clients face as they battle a financial hardship.

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