Planning ahead can make a huge difference when it comes to your taxes. That’s because the IRS’s rules and regulations include a lot of little details when it comes to deductions, credits, and exclusions.
For example, for most taxpayers, only the part of your medical expenses that exceed 10% of that year’s AGI (adjusted gross income) can be deducted from your taxes. Because of this threshold, prepaying qualified medical expenses (like paying a lump sump for a course of treatment, such as a child’s braces) can push you over that 10% line. This kind of deduction bunching can help prevent situations where you end up just below the threshold for multiple years in a row.
Or, if you’re selling your home, selling it too soon can make the profits taxable. When you live in a house for more than two years (out of the last five), profits from the sale of the property are tax free (up to $250,000 for individuals or $500,000 if you’re married and filing jointly). But if you sell the house shy of the 24-month mark, all of those profits are taxable.
At Taxation Solutions, Inc., our team has been providing tax services for more than 40 years. We’re standing by to help you with the tax planning services you need to avoid costly tax mistakes. Our goal is always to help you reduce what you owe in taxes while fully adhering to the IRS’s rules. We know the tax code inside and out, and we’d love to help you take advantage of that knowledge. Call now to get started!