Money Quick Tips: Six Tax Do's & Don'ts

  
     
February 25, 2013
Whether you're doing your taxes on your own or seeking professional help, here are some of the hottest topics according to the IRS and some tips from tax experts.

We'll run down six do's & don'ts:

1. Look at medical deductions. You can only deduct costs that are more than 7.5% of your adjusted gross income. But don't overlook any medical deductions such as prescription eye glasses and contacts. Believe it or not, they fall into the same category as medical expenses such as wheelchairs and hearing aids. And you can deduct 23 cents a mile for driving to and from medical appointments.

2. You don't have to be unemployed to take advantage of job-hunting write-offs. If you join a professional network, invest in some nice stationery or business cards, travel for an interview … it can all be deducted even if you're just looking for a different, better job.

3. Sure, you give money to charity and you've even tallied up the value of all the clothes and other items you've donated to charity. But you can also deduct 14 cents per mile for all the driving you do on behalf of charity.

4. Don't forget that freelance gig or temp job. You've got to report ALL income, even small sources of it. Otherwise there may be a variation in your filing vs. official income records based on what others are claiming, and even a small discrepancy could set off red flags and trigger an audit.

5. If you're calling it a home office and taking related deductions, make sure the space is not serving double duty as a storage room or playroom. The IRS requires "exclusive" use. If you can meet that threshold, the deductions can be substantial and include portions of property taxes, utilities and insurance.

6. Keep this steadfast rule in mind to avoid phishing schemes and identity theft: The IRS is not big on e-mail. They're not going to send you unsolicited e-mails about your finances. Your best bet is to go to the official IRS website directly vs. responding to anything that gets sent or pushed to you. And, remember, it's IRS.gov, not .net or .com