TAX TIPS

A tip on how to lower your taxes

How to Double Your Property Tax Deduction

In most states, property taxes are paid a year behind the year they are assessed (keep in mind some states have no property tax and therefore this would not apply).

In order to double your property tax deduction for this year, pay this year's taxes before December 31. If you can't afford to pay property taxes twice in one year, remember the funds are usually escrowed with your mortgage payment specifically to pay taxes. If you decide to pay additional property taxes, check with your mortgage company to see what your escrow balance for taxes is at that time. Then when you can pay the taxes at year end, take the receipt issued by your department of property taxation and submit it to your mortgage company for reimbursement. They must refund the balance when you show proof of payment of the taxes.

If you can pay additional property taxes, it's a good idea. That deduction may be eliminated, but it won't happen until after the election if it happens at all. Paying now means you will secure at least an extra deduction that others won't.

This technique is great for salespeople who find themselves closing that big deal at year-end, thus experiencing extra cash. It lowers your tax in the time of plenty, and at the same time lowers expenses for the next year which may not hold such fortune. Pre-paid tax deductible expenses provide a good way to manage taxes for anyone who has up and down trends in their income.


What's a Red Flag?!

High amounts for charitable contributions, mileage claims for a small business that does not usually require a lot of travel, unusually high entertainment costs, a home office deduction, or unusual medical expenses are among those deductions that may be scruitinized.

By proving proof in the case of a potentially suspect deduction with the return, you may eliminate the need for the return to be audited. Proof may include copies of cancelled checks, copies of receipts, or an affidavit.