It’s never too early to start thinking about and
organizing for 2017 taxes, even if you haven’t filed for 2016 yet. Here are
some tips to help you have the easiest tax year ever.
Medical and dental
expenses. Amounts you pay for medical and dental expenses are deductible,
including any amounts you put on a credit card. Now would be a great time to
start gathering that information into one spot, like an Excel spreadsheet. If
you really want to make your tax preparer happy (even if it’s you), categorize
them by 1) prescriptions, 2) doctors and dentists, 3) labwork and radiology, 4)
hospitals and other facilities, and 5) medical devices such as eyeglasses,
hearing aids, wheelchairs, and crutches. Also, if you have a health insurance
policy that is not through your employer, the premiums paid are deductible too.
Don’t forget to include them. Click HERE for a more comprehensive list of
qualifying medical expenses.
Charitable
deductions. Have you donated this year? If so, you might have received a
confirmation letter from the organization acknowledging the donation. Keep the
original or a scanned copy in your tax file. Many charities wait until the end
of the year to distribute these letters so there is a chance you might not have
one yet. Remember that a canceled check is not adequate evidence anymore. A
written confirmation from the donee is required. For noncash donations, ensure
that you list out all items donated, estimated value, and date of the donation.
If you are going to report more than $500 worth of item donations, you will
need this information to complete Form 8283 that accompanies your personal
return.
Documentation for
dependents. If you are planning on hiring a tax preparer, get ready to
provide proof that your dependents live with you or that you have the right to
claim them. Due diligence requirements are in place where preparers must now
request documentation of that proof, particularly if the Earned Income Tax
Credit will be taken. Examples include report cards from school or medical
bills…anything that shows the dependent’s name and your address. If you have
joint custody and the other parent’s address is on most records, a copy of your
divorce decree should be sufficient evidence.
