Although I am trying to publicize my writing, especially the recently released K2K4 (Knight to King 4: The Fischer-Kasparov Match) as soon as people learn I am a tax professional, the question invariably arises, “How can I save taxes?” My glib answer is always, “Don’t pay it.” (Sometimes I crack myself up).
Seriously, I do have sound advice that I have bumper-stickered. This at the insistence of my wife, who lives in fear that I will wax eloquent in mixed company, so boring people that we will lose the friends and acquaintances we have. In any event, my advice can be summed up in eight letters: D-O-C-U-M-E-N-T.
We all forfeit deductions (which reduce taxes) either because we are unaware of them, do not recall spending the money on them, or cannot prove that we paid the expense. Two simple examples. Last Sunday after Church I went to the nearby bakery, where outside a cub scout was collecting for something or other and I tossed a few dollars into his tray. This is a bona fide charitable deduction (see section 170 of the Internal Revenue Code). How many of these occur during the year that we fail to claim? Documenting the payment is the key. Admittedly I was not going to ask the Scout for a receipt, but under the tax laws a contemporaneous diary can be acceptable proof, as well as a reminder come tax prep time.
The second example involves some endeavor that has yet to yield money but is profit oriented (writing K2K4, acting, opening a home business, etc.) As long as you document your expenses, you can claim them as deductions (in the author example computer supplies, research books, payments to an editor, fees for a workshop, to suggest but a few). These kinds of expenses all add up and can be a lifesaver when April 15 next rolls around and you realize how much of your income has been offset and that welcome refund check comes in the mail. My wife is going to read this; otherwise I could go on for a few thousand words more.