One of my New Year’s Resolutions every year is to stop procrastinating! Notice I said it’s one of my resolutions every year. This is the year I will get organized and be proactive so I won’t stress about the deadlines. I’m starting with taxes. I’ve received my W-2’s and have all the mail marked “important tax documents enclosed” in a folder labeled TAXES. I’m ready. I am by no means a tax expert so I consulted with Dr. Joan Koonce, UGA Extension Financial Management Specialist, for tips on filling this year’s tax return.
According to Dr. Koonce, if you have a simple return you may want to consider filing taxes yourself. If you decide to file yourself, you have two choices: take the standard deduction or itemize. If you choose to take the standard deduction because it the simplest method you are not alone. According to Dr. Koonce, “Many people choose the standard deduction over itemizing deductions because it is the easiest. However, taking the time to itemize could save you a lot of money.” She suggests you review the following possible deductions; if they apply you should consider itemizing your tax return.
• You can deduct a portion of your medical expenses. Medical expenses that exceed 10 percent of your adjusted gross income (AGI) are deductible. If you were born before January 2, 1949, medical expenses only have to exceed AGI by 7.5%. If you had major medical expenses in 2013, this deduction might benefit you.
• You can deduct mortgage interest paid on your first and second home. First and second mortgages, home equity loans, and home equity lines of credit are applicable. Don’t forget that real estate and other property taxes are deductible expenses too. In addition, primary mortgage insurance premiums are deductible by some homeowners who purchased their home during a certain period of time.
• You can choose to deduct either your state and local income taxes or the sales tax you paid on retail purchases for the year. Of course, you would use whichever is larger.
• You can deduct charitable gifts given to IRS approved charitable organizations. Not only can you deduct gifts to charities, but gifts to religious, scientific, and educational organizations apply as well. You can also deduct some losses from theft or natural disaster.
• You can deduct a portion of job and some other miscellaneous expenses that exceed 2% of your AGI. Union dues and job travel are examples of deductible miscellaneous expenses that fall into this category. A few miscellaneous expenses can be deducted without the adjusted gross income limitation.
There are some things to remember should you decide to itemize your deductions on your 2013 taxes. Limitations apply to some of the deductions described above. Also, if you reach a maximum income level, total itemized deductions are capped. The maximum income level is based on your filing status. Remember that if you and your spouse are filing married filing separately and one of you chooses to itemize deductions, then the other must do the same. Also, don’t forget to keep records such as receipts for the items you are deducting in the event you are audited.
Don’t procrastinate; it is important to file your tax return on time. The deadline to file your 2013 federal income tax return is April 15, 2014 unless you file for an extension. If you're not going to be able to file your federal income tax return by the due date, use IRS Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. Filing this extension gives you an additional six months (to October 15, 2014) to file your return. However, don't assume that the extension gives you additional time to pay any taxes due. If you don't pay any taxes owed by April 15, 2014, you'll owe interest on the tax due, and you could also owe penalties.
I’d like to thank Dr. Joan Koonce for the tax information included in this article. She recommends checking the IRS website at www.irs.gov if you need additional information concerning itemized deductions.
Mitzi Parker is Sumter County Extension agent, Family and Consumer Sciences, University of Georgia Cooperative Extension Service. Contact her at 924-4476.