When Itemizing Deductions Is Best – We have compiled some of the best deductions you can make when it comes to itemizing. It’s done by freelancers and those who run their own businesses regularly. It can save lots of money for every type of worker.
When you do itemize, you can subtract non-federal taxes from your federal income. The more you can deduct, the less you pay. Did you know that you can deduce state and local income tax from your federal tax returns?
That includes sales tax, real estate tax, property tax and investment taxes. Beyond that, California, New Jersey, New York, Rhode Island and Washington taxpayers can take advantage of state disability and compensation deductions. If you are interested in learning more about what deductions you can make, speak with a certified financial planner.
Schedule A offers a blank line for “other” taxes, where you can include foreign income taxes that many stock holders pay on their mutual funds whose holdings include overseas investments. Your fund manager should send you the necessary documentation, and your investment advisor can help you to make sense of it and file properly.
While you’re getting excited about all the deductions you didn’t realize you could make, remember that there are many things you cannot deduct from your federal taxes, including Social Security, Federal estate taxes, car registration and license fees.
If you are unsure what counts and what does not, ask your financial advisor. Any good wealth advisor would do what’s in your best interest. Good money management pays off when you have great money managers.