Let’s face it, nobody likes paying taxes. That’s why at tax time, many American taxpayers often obsess about ways to lower the amount they might owe or maximize their tax refund. In fact, many frequently pose a very popular and specific question: “Can I write that off?”
But what exactly is a write-off, and more importantly, how can it help you reduce your taxes?
The term write-off is actually an accounting term that refers to a legitimate expense that can be deducted from your taxable income. Once thought of as only for the wealthy, write-offs are available to all American taxpayers, including those with low-to-moderate income.
Some common types of write-offs available include:
- Charitable donations. Do you make donations to your church or to non-profit organizations? You may be able to legally deduct your contributions. If you visit IRS.gov, you can find out what organizations are eligible for tax-deductible organizations.
- Job expenses. Do you use your car for work and have expenses, such as gas, tolls and parking fees that are not reimbursed? You may be able to deduct these expenses as well as other job-related unreimbursed expenses, such as uniforms you must purchase as part of your job or professional or association fees you must pay.
- Mortgage interest/real estate taxes/mortgage points. If you own a home and have a mortgage, you should be able to deduct the interest you pay on your mortgage. You can also deduct the real estate taxes you pay on your home as well as points a lender charges you as part of their mortgage closing costs.
- Hybrid car tax credit. At tax time, it pays to be green. If you own a hybrid, you may be able to deduct the cost of a purchase or lease of a hybrid car.
- Business expenses. If you own a business, you can deduct office supplies and equipment, as well as other expenses that are necessary in order to keep your business and your office running.
Do your homework before you write off anything.
For more information on the types of write-offs available, visit IRS.gov. As with all tax-related matters, be sure to keep good records and proof of all your expenses. If you’re unsure about a particular deduction, talk to a tax preparer or CPA, and by all means, don’t be afraid to ask, “Can I write that off?”