When it comes to taking qualified deductions on your federal tax return, three things must happen:
- Recognize that an expense might be deductible on your tax return.
- Keep a record of the expense in an organized fashion.
- Obtain the proper (and timely) documentation to support your deduction.
This might be obvious to most people, but here are some typical areas where taxpayers often fall short. In the long run, these items could end up costing you plenty during tax filing season, and trigger IRS audits.
- Cash donations to charity. To deduct and support your deduction to a qualified charity you must have valid support. Donations of cash are no longer deductible if they are not supported by a canceled check or written acknowledgement from the charity.