Tax Tips and Deduction Guidance

Somethings (almost) Always Matter

It is a point of professional pride that I found errors in two of our members’ prior-year tax filings. Coincidentally, both were prepared personally by H&R Block tax associates, and both failed to deduct legitimate moving expenses. For one member, the difference was so significant that we filed an amended return to get money back (the other’s would have been a ~$35 refund, and she decided not to bother). The failure of these paid preparers is especially galling because moving expenses, when certain criteria are met, always count- even if you are taking the standard federal deduction. And it’s not just a few things that count towards moving expenses – it’s almost anything related to the move, so it adds up quickly.

Here are things that almost always count, regardless of whether one itemizes or takes the standard deduction:

– Moving expenses

– Student loan interest (phases out at higher incomes)

– Traditional IRA contributions (phases out at higher incomes)

– Educator expenses (the first $250 of eligible purchases)

As the anecdote I started this entry with compels, if you are having someone prepare your taxes don’t be shy about asking about these categories!

Other Deduction Guidance

Given the range of possible deductions, it’s not surprising that people commonly miss some. Here is one of our favorite collections of oft-missed deductions.

When to File

Congress and the IRS are often quite busy changing and tweaking things late in the calendar year.  As such, the tax software companies have little time to debug the final version of their software. For this reason (and a few others), I don’t even start preparing people’s taxes until February each year, after the IRS has issued its clarifications and the software makers have used early filers to find the bugs in their software.  Furthermore, while most W2 and 1099 forms should arrive by the end of January, some companies are invariably late; if you file too early and forget about income, you will need to file an amended return. I’ve also seen brokerages occasionally send revised 1099 forms in mid-February.  So, unless you’re desperate for a refund (or are filling out a FAFSA), it may be less hassle to wait until the end of February to start your taxes.