The No. 1 tax strategy missed by consumers every year could save you hundreds of dollars and provide a perfect tax deduction.
[WEB EXTRA: Tax tips]
All you have to do is pay your credit card debt with a home equity line of credit.
Interest on a credit card is easily three times what you would pay on a home equity line and the interest is never tax deductible.
Kissimmee certified public accountant Don Norwalk says rolling that debt to a home equity line allows you to pay it off at a much lower interest rate (usually 4 percent or less) and write off the interest.
"All of a sudden we are able to get a deduction on our tax return for all of the interest paid," Norwalk says.
Norwalk says planning your tax return now gives you a chance to review and maximize your deductions well before that April 15 deadline.
Key Tax Deductions include:
- Mortgage Interest
- Property Tax
- Charitable Contributions (due by end of year)
- Retirement or 401-K contributions
There is another deduction most tax payers don't consider and that is your sales tax.
Every cent you pay in tax on every item you buy from shoes to laundry detergent to a gallon of milk is tax deductible.
Norwalk says the IRS already allows a deduction for sales tax.
For instance, a family with an income of $60,000 gets a standard sales tax deduction of $900.
So if you ended up with $1,000 in sales tax receipts you would get an additional $20 hardly worth the trouble of collecting receipts for 365 days.
However, Norwalk says there are exceptions that could pay off for a thrifty tax payer.
"If you furnished your whole home this year, maybe there was a lot of sales tax on some high end purchases then you might want to take a look at it," he said.
Don Norwalk can be reached for additional tax advice at: http://norwalkcpa.com/
For more information on tax deductions go to: http://www.irs.gov/uac/Newsroom/Itemizing-vs-Standard-Deduction-Six-Tips-to-Help-You-Choose