Editor's Note: This article is part of our 2014 Tax Tips series. Robert Flach is an expert with more than 40 years of experience as a tax professional and also blogs as The Wandering Tax Pro.
NEW YORK (MainStreet) When preparing your income tax return you are often faced with choices on how to treat a certain situation. For example do you -
- File as Married Filing Joint or Married Filing Separate?
- Claim a personal exemption for a dependent student or do not claim the exemption to allow the student to claim an education tax credit on his or her own return?
- Itemize your deductions or claim the Standard Deduction?
- Deduct state and local income tax paid or state and local sales tax paid?
- Deduct state and local sales tax paid using the Optional Sales Tax Tables or claim the total actual sales tax paid?
- Claim the standard mileage allowance for business driving or deduct actual expenses?
- Depreciate a new business asset or claim a Section 179 deduction?
Also consider how federal choices will affect your resident and non-resident state and local tax returns. Choosing one option may save you $50.00 in federal taxes but cost you $100.00 in state income taxes.
You goal should be to make the choices that will allow you to pay the absolute least amount of combined overall federal, state and local income taxes possible.