State Laws
Record keeping

"Record keeping" includes (1) noting dates and items and (2) keeping any receipts.

Many deductions are lost each year simply because people don't keep good records. Keeping track of things like your business travel expenses helps you remember to deduct them and also provides verification if you're audited.

Reduced withholding

If you get a large refund each year, you are having too much money withheld from your paycheck. Money withheld by the IRS earns no interest for you. Wouldn't you rather have that extra money to earn interest for you each year? While there are significant penalties for not withholding enough to pay your taxes, there is no reason why you should give the government too much and not get any interest on it.

One warning. Some people get into trouble by under-withholding and then not having enough to pay their taxes. What you want is neither to under- nor over- withhold. If done right, you will come out with almost no refund each year.

There's an easy way to do this if your income this year will be about the same as last year's. Simply use last year's total tax on your return as a guide and reduce your withholding to come out to slightly more than last year's total tax.

Charity expenses

Most people know that donations to charity are deductible, but you may also deduct expenses you incur when working for a charity.

Generally, unreimbursed expenses incurred on behalf of a charity are deductible. These include automobile expenses (the standard mileage rate is14 cents per mile), parking, tolls, telephone calls, and other out-of-pocket expenses directly connected with and solely attributable to the performance of services for a qualified charitable organization.

Travel expenses are deductible only if they include "no significant element of personal pleasure, recreation, or vacation in such travel" (quoted from the Internal Revenue Code). This generally means that the person who travels must spend all working days on the charitable business. Examples could be attending a convention that runs from 9-5 every day or actively supervising a scout trip. Since this is a gray area, you might want to check with a tax expert before assuming that the expenses are deductible.

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