You may have taken help of a Certified Public Accountant to file your tax return accurately, but have you ever wondered how a CPA files his/her return? Go through this article to know the tax secrets that the Certified Public Accountants (CPAs) use while filing their own tax returns.
1. Deduction on health savings account - If you put a certain amount (as per the limit mentioned) in a health savings account, then you can claim tax deduction for the amount you have contributed. Moreover, you can use the accumulated funds for qualified medical expenses without paying any tax on the amount withdrawn. However, you'll have to pay a tax if you withdraw the amount for any other purposes and you're under 65 years of age.
2. Claim tax deduction on home business - Have you ever thought why the CPAs often ask their clients to sign the tax returns at the CPA's homes? This is because they can claim home office deduction if they meet their clients regularly in their home office. So, if you have a small business of your own, then meet your clients/customers at your home office and keep records of your meetings so that you can produce them to the IRS (Internal Revenue Service) if required.
3. Tax deduction for saving energy - The CPAs always claim tax credits for upgrading their houses so as to save energy. However, before you upgrade your house, check out the eligible list of upgrades as per the IRS. By claiming the tax credit, you can reduce 30% of the amount you've actually spent on your home.
4. File for deduction on auto expenditure - If you are a small business owner, then you can deduct the auto expenses for your business purposes. This means, you can deduct the portion of your car usage especially for business purposes. To do so, you can either use the IRS-approved mileage rate or you can track actual expenses made for business purpose. Do you want to know the secrets that the CPAs use to calculate? They usually calculate the deduction using both the methods and select one that offers the largest amount of deduction.
5. Taking Advantage of Tax Credits - Many tax credits can be leveraged to lower tax liabilities for many families and individuals. There are tax credits for energy conservation, tax credits for having children, and tax credits for higher education for your child.
In addition to above, you can also claim tax deduction if you have donated any of your household items. You're also eligible to get this tax credit if you've donated cash. To claim such deduction, you can donate your old clothes, which you don't wear anymore, to a charity. By doing so, you can claim the value of your donated items on your tax return. However, make sure you get an itemized receipt from the charity in order to claim this donation tax credit on filing your income tax return.