As tax season approaches, be sure not to fall victim to these common oversights:
You can receive charitable deductions for your old clothing and furniture that you wish to dispose of. The important component is ascertaining the value of those items. If your deduction exceeds $500 for noncash donations, a Form 8283 will need to be filed with the IRS. If the donation exceeds $5,000 you will need a formal appraisal.
If you are divorced and have children, make sure you determine which former spouse is claiming which child as a dependent. Be sure to follow the divorce decree, as a violation of this can lead to other legal issues.
Funding Tax-Advantaged Accounts Too Late
A lot of people wait until the filing deadline to contribute to their IRA’s. The best approach is to fund the IRA as early in the year as possible. Statistically, early finding has provided an average additional return of $14,507 over any 10-year period.
Failure to Utilize a 529 College Savings Plan
Your saving may be tax-free towards education costs. In several states, you can get a state income tax break for your contribution. “Even if your kids are already in college, if your state allows the deduction, contribute to the 529 and take the money out in the same year to get the deduction,” says David Haas, a financial advisor in Franklin Lakes, NJ.