Tax Payer Deduction Checklist

The US Tax Code is constantly changing by action of Congress, Revenue Rulings, private letter rulings and court decisions. Furthermore, what is not deductible this year may have been deductible in prior years, and if a return is challenged, these previously deductible items may now be re-introduced.

What is apparent in a review of this list is the need for good record keeping. You should have a record of payment, such as a canceled check, credit card slip or paid invoice. You should also have a record as to the reason for the expenditure. Suppose you had very serious storm damage and were required to have damaged trees and bushes removed and replaced with new plantings. A copy of a newspaper article on the storm and a few photographs of the damage would help substantiate your loss. You would also need a letter from your insurance company as to why they were not covering the loss.

A large part of preparing your income taxes is often the struggle to remember what expenses might be deductible. Every year taxpayers overpay their taxes because they have not taken all the deductions to which they were entitled. This checklist includes several items, some of which may or may not have application.

As you review the following items, do not assume they are deductible for the current year. At some time they have been. At some time in the future many will no longer be deductible, at least in full.

• Use as a guide when preparing a new tax return
• Discuss each item checked with your tax preparer

The following link provides a checklist of expenses that may be deductible. However, do not overlook the potential benefits of arranging for items to occur within a specific person’s tax return. This can be very effective planning when there are multiple taxpayers within a family, such as husband, wife, parent or child among whom the income or expenses can be re-allocated to some extent. This also applies to the concept of filing separate returns, rather than a joint one.

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