Tax season is nearing, and if you're like many people, you may be missing out on deductions that could save you money. In our latest podcast episode, tax strategist Natalie Kolodij shares insights on common tax myths and strategies that may help reduce your tax liabilities.
“The tax code is 70,000 pages long,” Natalie points out. “There’s a lot to consider. I prefer to focus people on a few key things to keep in mind.”
For W-2 employees, who typically have fewer tax benefits, Natalie emphasizes several frequently overlooked deductions. If you reside in a state with no income tax (such as Florida or Washington), you can instead deduct sales tax, particularly on significant purchases. Additionally, remember to account for personal property taxes related to vehicles, boats, or RVs.
Medical expenses can be deductible too, but only the portion exceeding 7.5 percent of your adjusted gross income. Natalie recommends grouping elective procedures in one tax year to take full advantage of this deduction.
Charitable deductions can present unexpected chances as well. Miles traveled while volunteering, costs associated with fostering animals, and even donated home renovation supplies to organizations like Habitat for Humanity can be eligible. Natalie also discusses how “bunching” donations in alternating years can greatly enhance tax savings compared to donating the same amount yearly.
The discussion also addresses major misbeliefs regarding the sale of your primary residence. While many think living in a home for two years renders all profits tax-free, Natalie clarifies that any periods of “non-qualified use” (such as when it was rented out) can be subject to taxation.
For small business owners and real estate investors, Natalie advises keeping track of all business-related expenses, even minor ones like industry-specific books or educational resources. She stresses the importance of detailed record-keeping and maintaining separate accounts for business expenses.
As we adjust to tax law changes post-election, Natalie's guidance remains pertinent: stay adaptable in your tax planning and consider collaborating with professionals who specialize in your unique needs.
Timestamps:
(Note: Timestamps might vary on individual devices based on dynamic advertising run times. The timestamps provided are estimated and could be off by several minutes due to changing ad durations.)
(0:00) Show introduction
(2:00) Introduction to tax day conversation
(2:46) Common tax savings for W-2 employees
(4:12) Clarification of standard vs. itemized deductions
(5:46) Property tax deductions that are often overlooked
(6:58) Sales tax deductions applicable in no-income-tax states
(9:06) Thresholds for medical expense deductions
(12:53) Strategies for charitable giving and overlooked deductions
(17:51) Benefits of bunching donations in alternate years
(22:20) Misconceptions about home sale tax exclusions
(30:44) Tax withholding adjustments and common errors
(44:35) Debunking myths about tax on bonus payments
(52:52) Tips for finding the right tax professional
(1:02:02) Advice for small business owners and real estate investors
(1:09:38) Best practices for maintaining tax records
(1:15:14) Preparing for potential changes in tax legislation
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Tax day is nearing, and if you’re similar to most individuals, you may be missing out on deductions that could help you save money.