- [Tracy] While we have had so much on our minds this year,
we do have to start thinking about our tax return.
And there are some things left that you can do
to help mitigate your taxes,
before the end of the year.
Lisa Green Lewis CPA and TurboTax expert,
gave us three things to think about.
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First, Lisa, is to estimate your taxes early,
what do you mean by that?
- Get a picture
of your overall
tax situation as early as you can.
So, start gathering any documents for deductible expenses.
Know what your income is that you made this year,
whether you're self-employed an employee or had investments.
One of the ways that you could do that,
we have our Turbo Tax TaxCaster,
it helps you estimate your overall tax picture.
It gives you a really good estimate
of whether you may get a refund,
or
may possibly have to pay some taxes.
And then it can also, there's some tricks there
that you can do before the end of the year.
- Right, 'cause a lot of people,
might be thrown off guard a little bit
especially if they received unemployment checks
and they didn't have withholding.
So, we don't want people to be taken by surprise come April.
The other thing that you said is to take advantage
of all the deductions.
And I know there's so many deductions
that people often miss.
Maybe we can talk about some of them.
- Right, yes.
There're so many deductions that people miss.
We talked a little bit before about donating to charity.
So, a lot of people miss,
if you driven to volunteer time,
the mileage you drive, you may be able to deduct that
at 14 cents per mile.
A lot of people forget about their sales tax deduction.
You have to pick between state and sales tax deductions,
but if you've made big purchases and you live somewhere
where, you know,
the state sales tax is PI,
you may see a bigger deduction just by taking that.
Don't forget one of the tricks.
If you've made investments,
you know, and you've had some losing stock offset,
offset your losses with your gains,
and then you can also carry forward your gains
to your ordinary income up to $3,000.
- Right, and that's a really important point.
And that was your third one,
to say play matchmaker with your capital gains and losses.
And people need to start to really think about that
if you haven't already.
Because we're coming to the end of the year,
and the market is closed on a couple of days
because of holidays.
So, pay attention,
call your advisor, your trader,
whoever you deal with and start to get on that.
But same goes for like reinvested dividends, right?
We all reinvest our dividends and we forget
that we should go back-
- Right. - And do something
with these things.
Right?
- Right, yes, if you have reinvested dividends,
don't forget you know,
you need to include those in your costs.
Including 'em in your costs
will lower the game that you see.
- Right, and so many people forget to do that.
Then we also, you also talked about student loan interests,
Of course, the child dependent care credit.
But points paid to a refinance,
I think that's a missed one too, isn't it?
- That is often a miss one.
So, you do get a deduction for points you pay.
If you refinance your loan,
the points are divided over the years of your loan.
But it still can be, you know, a big deduction.
And then a lot of people,
you know, they may have a refinance
that have points they have not deducted,
and then they go and they refinance again.
And so, they need to know that those points
that are left over on the other loan,
you can deduct those once that you refinance,
or another loan.
- Right, right.
Again, like it's just a matter
of keeping track of all this stuff.
You also mentioned too you know,
if you are one of the lucky ones
that are up things gonna get a bonus at year end,
maybe depending on your situation
you wanna defer it to 2021, right?
- [Lisa] Yes, you could defer your bonus.
You know, a lot of people get year end bonuses.
So, asking your employer to defer it
to the first week of January,
you know, you're dismissing it for one week.
But you're moving that income into the following year,
and, you know, lowering your taxable income this year.
And it's especially good to look at that,
if you think it's gonna bump you up
into another higher tax bracket this year.
- Right, and vice versa too, right?
If you happen to, you know, unfortunately be laid off,
or you're unemployed for a bit and you made less money,
maybe take it this year. - Right.
- Same with accelerating deductions
and defer in things like that too,
right?
It really makes sense for people to look at their situation.
- Right, yes.
You can look at, you know,
what's your tax bracket is this year or next year.
And depending on what it is,
you can make those moves depending on
whether it's gonna be higher or lower in this year.
- And people, many people were out looking for jobs.
So, job hunting costs too, don't forget those.
Especially in particular, if you're job hunting
in the same fields.
Those are all important expenses.
- Yeah, one thing to point out on that,
So, under tax reform,
job hunting expenses are no longer deductible
unfortunately.
- And, I wanted to bring that up,
because I think that's important that people keep track
of this stuff, but now that they can put it on.
I'm glad we talked about that.
You said state income tax paid on last year's return,
don't forget that as well.
And, finally taking a class.
How does that help me,
other than making me more enlightened?
- Yeah, so, you can pay for a class for next quarter,
either yourself, or if you have a college student,
as long as you pay for it by December 31st
for the first quarter of next year.
You may be able to take American opportunity credit,
if you're in the first four years of college,
or your student is,
or the lifetime learning credit up to $2,000.
And that could be just for one class.
There's no stipulation.
That is for the first four years of college.
- So, it's really important that people,
like, take a step back, spend a little time.
I know it's the last thing you wanna do,
but it's, if you get a sense of where you are,
you can make some smart decisions.
Lisa Green Lewis, CPA, TurboTax expert,
thank you for sharing all this.
And of course, everyone should check out the site,
the Tax Caster, it'll certainly help your situation.
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