One of the most dreaded times of the year is when it’s time to submit tax dues to the government. Tax is a compulsory payment that each individual and organization, whether a large or small business, has to submit to the Internal Revenue Service. However, one can adopt a number of legal ways to minimize this payment; tax deduction is one of the most popular ways of reducing tax dues. Tax deductions refer to those exemptions on income that are approved by the revenue department of the United States. However, what is shocking to know is that a number of people miss the opportunity of properly taking the eligible deductions into account to their taxable income, and as a result, pay more than what is actually due from them.
In a recent survey conducted by a San Diego based Tax preparer firm, it has been found that most San Diego residents and United States citizens as a whole lose billions of dollars every year due to missed tax deductions. In order to make you more aware about these missed deductions, we’ve compiled a list of tax deductions missed by most individuals and small business owners in San Diego:
- Charitable donations
A great way to fulfill one’s moral and social duty is by doing good deeds with charitable donations. However, a number of people tend to forget that their charitable donation makes them eligible for paying less taxes. Charitable donations are one of the most often missed tax deductions. - Reinvested Dividends
A large number of individuals and small business owners invest their hard earned money in buying mutual funds. As a normal phenomenon, the dividends received on mutual funds get reinvested into purchasing more shares, thus increasing a person’s tax base. However, the IRS gives a valid deduction on the reinvested dividends which most taxpayers tend to ignore. - Medicare premiums
Small business owners or individuals who are self-employed are eligible for claiming their Medicare premium as a deduction from their taxable income. This premium is eligible to be deducted only by people who are not covered by any employer-subsidized health scheme. Unfortunately, most people who fall under this category forget to include this deduction. - Refinancing points
Buying a house or a property is something common to an employed and self-employed individual, but it also makes them eligible for a deduction that people don’t really know about. Refinancing a mortgage loan taken to buy a property or house gives one an opportunity to claim a tax deduction in the form of refinancing points.
All in all, there are a number of tax deductions that individuals and small entrepreneurs in San Diego forget to include while calculating their income tax. The best way to avoid this mistake is by engaging advice from a professional who is familiar with common and complex deductions, such as a Certified Public Accountant who is professionally qualified to work as a tax preparer. CPAs have wide array of knowledge in the tax field and can greatly help minimize tax dues by using valid tax deductions.
