Tax write-offs: Millions ignore them due to lack of understanding
Mandy Gambrell Scripps Digital
10:44 AM, Jan 6, 2014
Not making tax-deductible donations or keeping track of write-offs because you don't understand it? You aren't alone.
Tax preparers say millions of people do not claim tax deductions for which they are eligible because they simply don't know the process. Write-offs are needed to decrease taxable income, which lowers what is owed to the federal government.
Professionals suggest meeting with a tax preparer or attorney to best find out how to maximize deductions and to start keeping track early in the tax year.
Question: Charities and other organizations often push for last-minute donations at the end of each calendar year. Why?
Answer: Contributing before Dec. 31 each year is a way to get a tax deduction if you think you didn't get enough throughout the year. It is also a time many employees are given bonuses and have extra cash to spend.
Q: Do I need receipts from donations I make?
A: Yes. You must have proof of any contribution, regardless of the amount.
Q. I'm new to the work force, why should I invest in retirement, and what does it have to do with taxes?
A. Putting cash into tax-deferred retirement accounts is a solid investment. The money isn't taxed and some companies match 401(k) plans. A 401(k) is taken from your paycheck before taxes are taken, so it lowers your taxable income, which means paying less tax. Giving now means paying less taxes and having more for later in life. Note: You will pay tax in retirement.