Tax time is no fun. I think most people would rather go to the dentist than file their taxes. Fortunately, in this modern era where tax preparation software does much of the work, filing taxes isn’t as painful as it used to be. I’m going to make a case for doing a little extra work at tax time that can lead to a larger refund now or in the future.
Many tax deductions have an income test. This means that if you earn too much, you get no benefit from the deduction. Two examples of this are deductions for property tax paid and medical expenses. There are many others.
Taxpayers who enter expenses year after year only to find that they don’t make any difference to their refund or taxes owed can be forgiven for not seeing the point of the extra work. Eventually, some decide not to bother entering the deductions any more. This can be a mistake.
I was helping a family member file his taxes recently and came across this situation with property taxes. He hadn’t bothered to enter property tax information because “it never makes a difference.” But, it turned out that a change in his situation for 2010 resulted in the property taxes making a substantial difference.
Even if these expenses don’t make a difference right now, this may change if your return gets reassessed. The change that causes the reassessment might result in some expense making a difference when it hadn’t before.
It is fairly painless to enter information into tax software and it may be worthwhile even if you feel sure that the information won’t make a difference.