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"Tax-Guide"
You always seem to have a lot of expenses that you think could help cut your tax bill if you itemized. But every year, they go to waste. The problem: Your costs regularly fall just short of the income thresholds they must meet in some deduction categories.
Get around this tax-reduction roadblock by bunching your expenses. It's too late to help cut your 2007 tax bill, but by setting up this strategy now, you can ensure that your "nearly" deductible expenses become full-fledged tax breaks next filing season.
Many deduction options
For miscellaneous expenses, think about prepaying any business magazine subscriptions or professional dues early to help you over the 2 percent mark.
If you looked for a new job this year, be sure to count your job-hunting expenses here, too. Just remember that your job search has to be in the same field in which you're already employed.
Do you have a hobby that nets you a bit of extra spending money throughout the year? Any costs you had toward that hobby can be totaled up as a miscellaneous expense. But you can't deduct more than you made on the hobby.
Write off your taxes, too
And if this whole deduction process is just too taxing for you and you pay a professional to figure it out, here's a final itemizing gift from the IRS: Fees paid to tax preparers are also deductible as a miscellaneous expense that can further cut your tax bill.
There are, however, a couple of downsides to this tax strategy.
Some items you might bunch into one tax year could cost you if you end up facing the alternative minimum tax. Some prepaid items, such as property and state income taxes, aren't deductible under AMT rules.
Also, bunching deductions usually helps you out only every other year. Generally, if you bunch your expenses into one year, you will find yourself short of the itemized deduction percentage requirement the next year and must claim the standard deduction then.
But getting the breaks only on alternate tax filings is still much better than missing out on them every year.
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