Estimating one's tax deductions can be a challenge, especially when accuracy is important. There are, however, many tips a person can use to make the job easier and provide for more realistic estimates. Among them are tips for estimating based on last year's deductions and seeking tax law updates. Additionally, a person can consider seeking a professional's help with making estimates, especially in situations that require the most accurate calculations possible.
One of the best tips to estimate tax deductions involves using a previous year's tax return to do so. Unless you have experienced significant changes in your income or family size, you will likely have the right to take the same deductions as you did last year. The amounts may not remain exactly the same, but you can probably make a reasonable estimate based on your previous deductions. For example, if you were able to deduct 20 percent of your home utility bills for business use and you have not changed the portion of your home used for business, you can make a reasonable estimate using last year's return.
The help of a tax professional also can come in handy when you are trying to estimate tax deductions. Tax professionals have the education, training, and experience that helps them provide the most accurate estimates possible. If you are trying to come up with an estimate for your personal knowledge alone, you might not need a professional's help. Making a mistake in such a case is unlikely to cause serious problems. If, on the other hand, you need to make an estimate for official purposes, you might do well to seek a professional's help to make sure the estimates you use are as accurate as possible.
Tax laws can change, and having the most up-to-date information can help you accurately estimate tax deductions. For example, you might learn that a recent change in tax law allows you to deduct less in the current tax year than you were permitted to deduct in the past. By learning this information before you make your estimates, you can ensure that your numbers are as accurate as possible. In most cases, you can find up-to-date tax law information on a tax agency's website or by requesting deduction-related publications. Additionally, you can call and speak with a tax agency representative if you have a specific question as you estimate tax deductions.
