Reinvested Dividends
This isn’t really a tax deduction, but it is an important subtraction that can save you a bundle. And this is the break former IRS Commissioner Fred Goldberg told Kiplinger’s that a lot of taxpayers miss. If, like most investors, you have mutual-fund dividends automatically invested in extra shares, remember that each reinvestment increases your “tax basis” in the fund. That, in turn, reduces the taxable capital gain (or increases the tax-saving loss) when you redeem shares. Forgetting to include the reinvested dividends in your basis results in double taxation of the dividends.
Charitable Donations
For example, ingredients for casseroles you prepare for a nonprofit organization’s soup kitchen and stamps you buy for your school’s fundraising mailing count as charitable contributions. Keep your receipts; if your contribution totals more than $250, you’ll need an acknowledgement from the charity documenting the services you contributed.
This is a great start. It’s the start of a new year. Get and keep your financial house in order.
Financial Freedom:The Most-Often Overlooked Tax Deductions was originally published on elev8.com
