Tax Season is upon us. Some people will be happy but others will be surprised! Financial expert Mark Lamkin from Lamkin Wealth Management says there are several new taxes this year, and you need to be prepared to maximize your deductions. Companies like H & R Block estimate that tax payers leave $1 Billion of refunds on the table, but Lamkin says he can give you a few steps to consider before you go to your tax preparer.
1. W-2's and 1099's
One of the biggest mistakes filers make is forgetting a W-2 or a 1099. Remember, a W-2 will be from one of your jobs, and a 1099 is generally from investments or independent contracting work. You're most likely to have several for the year. Also, don't forget the interest that you've paid on loans such as your mortgage and home equity lines of credit.
2. 2013 Tax Return
Many people, don't know where to start. If you're at a loss, grab last year's completed tax return. This will give you a starting point. This is your best reminder of how many W-2's,1099's, interests paid, and deductions you'll need to organize. Also when you complete this year's taxes, it's always good to go back item to item and see how it matches up to last year. Are there any discrepancies? Did you miss anything? This will help you get started and maximize your time.
3. New taxes
Last year, approximately 15 new taxes were suppose to kick in, however, with the fiscal cliff the increases were delayed until this tax season. Many higher income filers are going to be in sticker shock! Forbes magazine had an article discussing 15 new taxes in the last several years, and this is the year that most kick in. We have higher brackets for most filers, there is now a 3.8% surtax on investment income on married couples earning $250,000 and singles earning $200,000 and a medical device tax. There are several more, and Lamkin recommends with the number of changes we're going to experience this year is a good year to use a qualified, aggressive CPA that understands the new laws.
4. Harder deductions
The goal: raise tax revenue! This means that some deductions have been eliminated and others have been reduced. You need to claim every deduction you can legally take, so make sure you're working with a qualified tax preparer.
Here are a few deductions to consider: out of pocket charitable deductions, student loan interest, moving expenses for your job, job hunting expenses, state income taxes paid, refinancing points. There are also several education credits available, so make sure you do your homework here.
5. Check your math
It is always best to use a software program! According to the IRS, the most frequent mistakes made are in simple math. By using a reputable software program, you will most likely avoid this problem. Make sure you're using 2014 programs, since they will do the math, calculate and prompt you for deductions. Lastly, if you use a reputable program, the IRS will send you a correction notice not an audit notice (in most instances). You definitely want to reduce IRS interaction!
Lamkin Wealth Management
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office: 502-961-6550 Office
toll free: 866-961-6550
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