Menu

Tax deductions, do I even need to bother??

Home Tax Reduction Tax deductions, do I even need to bother??

  • Avatar emergencysavings 
    Participant
    Status: Physician
    Posts: 27
    Joined: 02/27/2017
    Splash Refinancing Bonus

    going through TurboTax they ask for a bunch of possible things to help identify tax deductions. However, I don’t qualify for things like student loan interest (MAGI too high) and auto registration (SALT limit). Knowing this, do I even need to bother going through the motions on TurboTax only to have it tell me I’m not eligible? I’d rather not go hunting for a number of documents if it means no tax deductions.

    Even though I’m saying “I didn’t pay student loans” and it’s untrue, will the government care if I don’t make mention of it on the taxes?

    #196563 Reply
    Avatar artemis 
    Participant
    Status: Physician
    Posts: 455
    Joined: 12/02/2016

    No one’s ever required to take deductions.  If you’re certain that itemizing isn’t going to net you anything, you can just zero those questions out and settle for the Standard Deduction.

    #196565 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7117
    Joined: 01/09/2016

    going through TurboTax they ask for a bunch of possible things to help identify tax deductions. However, I don’t qualify for things like student loan interest (MAGI too high) and auto registration (SALT limit). Knowing this, do I even need to bother going through the motions on TurboTax only to have it tell me I’m not eligible? I’d rather not go hunting for a number of documents if it means no tax deductions.

    Even though I’m saying “I didn’t pay student loans” and it’s untrue, will the government care if I don’t make mention of it on the taxes?

    Click to expand…

    No, just skip it. Honestly, we enter things like student loan interest on the returns even if it’s not going to be valid just b/c clients provide the info. Another reason is the SOL. If there is any chance that your return c/b audited and those deductions could turn out to be valid – for example, if you’re close to the line – then you want to include them on your return. Otherwise, they are lost if you are beyond the SOL.

    For many clients who ask about medical expenses or the sales tax deduction on a vehicle, we just tell them not to go to the trouble b/c it won’t help. If you already know the direction this is going and it’s pretty obvious, save yourself some time and skip the data entry.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #196575 Reply
    Liked by Vagabond MD
    Avatar spiritrider 
    Participant
    Status: Small Business Owner
    Posts: 1610
    Joined: 02/01/2016

    No one’s ever required to take deductions.  If you’re certain that itemizing isn’t going to net you anything, you can just zero those questions out and settle for the Standard Deduction.

    Click to expand…

    While not likely here, this is not entirely true.

    There is actual IRS guidance that you must take all available deductions, if to do otherwise would result in you gaining a tax benefit. This was specifically written to apply to the earned income credit, but can apply to other situations affecting other tax deductions, AGIs, MAGIs, employer retirement plan contributions, etc…

    Tax preparers are subject to specific sections of the tax code and IRS regulations to do due diligence to insure that this does not happen. It is one of the most severe sanctions a tax preparer can receive.

    #196647 Reply
    Avatar Jane 
    Participant
    Status: Other Professional
    Posts: 14
    Joined: 01/19/2016

    If you know the tax code pretty well, I agree it’s fine to skip things. Keep in mind that there may be differences between the federal and state tax returns. You may take the standard deduction for federal and itemize for state.

    #197273 Reply

Reply To: Tax deductions, do I even need to bother??

In case of a glitch or error, please save your text elsewhere, clear browser cache, close browser, open browser and refresh the page.

Notifications Mark all as read  |  Clear