Get a Bigger Tax Refund
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04-18-2005, 05:37 AM
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Dawtah of the Sun
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Get a Bigger Tax Refund
MAXIMIZE PART-TIME INCOME. Do you sell Mary Kay on the side, or have you dabbled in some other part-time business? Office expenses associated with your side gig—including a portion of your rent if you have a home office—can add up and bring down your tax liability, says Cheryl D. Broussard, author of The Black Woman’s Guide to Financial Independence: Smart Ways to Take Charge of Your Money, Build Wealth, and Achieve Financial Security (Penguin). “When you have a part-time business, the little things that you spend money on every day (office supplies, envelopes, stamps and so on) are deductible expenses,” Broussard says.
ADD UNREIMBURSED JOB EXPENSES. If you spent money while working that was not reimbursed, you may deduct it if it was an “ordinary and necessary expense” for fulfilling your job. The IRS considers an expense to be ordinary if it is commonly accepted in your line of business. For example, teachers often spend their own money for classroom supplies. Elementary- and secondary-school educators can deduct up to $250 for those expenses as an adjustment to income, says Tamara Walker Smith, director of accounting and tax services for Henderson Financial Associates, Inc., in Southfield, Michigan. And any amount over that $250 threshold can still be itemized and deducted. DEDUCT FOR YOUR JOB SEARCH. If you spent time and money looking for employment last year, you can deduct the expense incurred as long as the job you were seeking was in your current line of work. “Phone calls to potential employers, help in getting your résumé together, travel costs for interviews would all be deductible,” says Miller. And don’t worry if your efforts did not prove successful. “Just because you don’t get a job offer does not mean you’re not looking; those expenses are deductible,” she says. INCLUDE EDUCATION COSTS. If you took classes related to your line of work, you may qualify for a deduction. According to the IRS, you can deduct education expenses if the instruction maintains or improves skills you need in your current job or if you are required by your employer or the law to get additional training to maintain your current salary or job. Classes related to a hobby or those you take in preparation for a career change are not deductible. SUBTRACT TAX-PREPARATION COSTS. Money you spend to prepare your tax return is deductible. That means this year you can deduct the money you spent last year buying tax software or consulting a tax accountant. And keep in mind that patience pays: If you don’t need Uncle Sam to return your money immediately, avoid using rapid-refund services because they have costs associated with them, says Smith. “This is a loan from a lending institution that charges you interest and fees,” she points out. “If it’s not an emergency, file electronically. You should receive your money back in a few weeks.” Essence: Work and Wealthy |
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