Saving Tips On Taxes

[jeffrey]

1. Don't forget these extended education tax breaks you may qualify for: The Hope Credit is worth up to $1,500 for the first two years of college. The Lifetime Learning Credit is worth up to $1,000 toward undergraduate, graduate or professional classes.

2. Don't forget to sign and date your tax return. In the rush to get tax returns out on time, tens of thousands of people simple forget to do this. If you don't sign it, the IRS won't process your return which can trigger tax late penalties.

3. Don't throw those old things out. Take them down to your local Goodwill, Salvation Army or any other charity that would want them. Not only do you help a good cause, you may be able to deduct the donation on your taxes.

4. Double check your math on your tax return. The IRS says that for 2001 tax returns, miscalculation in tax owed topped 2 million. This either means you are short changing yourself or you aren't paying enough to the government which can result in penalty and late payment charges.

5. Get a little extra tax deduction this year by paying your January 1st mortgage payment in December. By making the payment early, you bring the deduction into this year's taxes instead of next year's. You can then deduct an additional month's mortgage interest paid come April.

6. Get free tax help from the IRS by calling the IRS Tax Help Line at 1-800-829-1040 or visiting their website at IRS.gov.

7. If you are unable to complete your tax return by April 15th, you can file Form 4868 to get an automatic extension to file your return (but not for payment of tax). You will owe interest on any amount not paid by the April 15th, plus a late payment penalty if you pay less than 90 percent of your total tax due by that date.

8. If you have a vacation home, you can rent it out for up to 14 days every year and owe no taxes on your rental income. After 14 days, however, all the rent you receive becomes taxable.

9. If you have students loans, you may be able to deduct as much as $2,500 a year on your taxes for the interest you pay depending on your income.




10. If you refinanced your house and paid points to do so, you can write off the refinancing points on your taxes over the life of the loan. If you refinanced a second time, you can write off the remaining points from your original home refinancing loan on your taxes.

11. If you turned 50 this year, you have a special tax benefit. You can make an additional $500 "catch-up contribution" to your IRA above your normal IRA contribution limit.

12. If you will owe tax this year and you are unable to pay the full amount that you owe, you should still file your return by April 15th and pay as much as you can.

13. Instead of giving a cash donation to charity, consider instead donating an appreciated asset. You don't have to pay capital gains on the appreciation (unlike cash on which you have already paid taxes) and you still get to take a deduction.

14. It may pay to mix business with pleasure on your next vacation. Various expenses such as the costs related to transportation, food and lodging may be partially deductible if you spend more time working than relaxing.

15. Make sure your address is correct when filing your taxes. Tens of thousands of refunds checks end up back at the IRS due to people providing the wrong address. Double check to make sure that your address is correct on your tax return and have your mail forwarded if you are moving.

16. You may be able to claim your parent as a dependent if you pay at least half of your parent's expenses, his or her gross income does not exceed $3,000 (2002) and your parent is a U.S. citizen. This is true even if your parent doesn't live with you.

17 You may be able to write off certain taxes you've already paid if you itemize your deductions. These include state, local and foreign income taxes, real estate taxes and personal property taxes (car, boat, etc).

18 Your children can lower your taxes. You may be entitled to deduct up to $600 per child with the Child Tax Credit depending on your income. Children must be younger than age 17 and be claimed as a dependent on your tax form to qualify.

19 Your move may be tax deductible. If you're relocating for full-time work and both your new job and new home are 50 miles or farther from your former home, you may be entitled to deduct all your non reimbursed costs of moving, travel and lodging expenses associated with the relocation excluding meals.

[PrincessPerky]

Did you know 16 and 17 are the same? except for the 2002 note?

[jeffrey]

Yes, there are several of those in the tips...It is because they are self generating from a data base and it seems that entry was put in twice. I am currently going through them all and updating and expanding the tips....thank you for pointing it out.

[suedavids]

Teachers are allowed to deduct up to $250 for classroom supplied purchased for the classroom

[MarianneJ]

If you owned a phone with long-distance service between 2003 and August 2006, you can get a one time $30-$60 rebate for excise tax. See more info here:

http://www.irs.gov/newsroom/article/...161506,00.html

http://www.washingtonpost.com/wp-dyn...112800536.html

[Oliver21]

1. Keep all business-related receipts. Keep track of what the receipts are for, and save them in a safe place.

2. Deductions. Many people neglect to carefully look for, and claim, all the deductions to which they're entitled. By simply taking the standard deduction, you may miss out on other available deductions.

3. Take all applicable tax credits. For each child under the age of 17, there is up to a $1,000 tax credit. There are also various other credits, such as those available when you adopt a child or when you elect to claim a Lifetime Learning Credit.

4. Take a loss. If you’ve done well with your investments and are looking at significant capital gains, prior to year-end is the time to offset some of those gains by selling a losing venture. Also, remember that you can carry forward up to $3,000 from previous years’ losses.

5. Consider tax-free investments. Returns are not very high, but if you're looking for a safe, tax-friendly investment, consider tax-free government or municipal bonds, among other such investments. This type of investment is particularly good for a high-income individual.

6. Remember charitable donations. While donations should not be made simply for tax purposes but for philanthropic reasons, you can always make a couple more at the end of the year to lower your tax bite. Remember to get receipts.

7. Gift if you can. You can give up to $12,000 away tax-free to each person you choose. This is typically for retirees with significant assets who want to gift money now, rather than leave it for estate taxes later.

8. Max out your IRA or other retirement plan contributions. Of course, by doing so you're assuming that your personal income will be lower when you withdraw the money. While that may or may not be the case, it’s safe to say that, if there are a number of years until you start taking distributions, the tax laws will likely change many times over between now and then — hopefully in your favor.

9. Put your (over 14-year-old) children on the payroll. By having them do some work for you, you’ll be able to shift some of your income that would be taxed at a higher rate to their lower tax bracket without being hit with kiddie taxes. Be careful, however, because college financial aid could be affected by their income.

10. Double-check your work. Errors in tax preparation and on tax returns account for millions of dollars that taxpayers could have saved every year. Remember to double-check everything.

[ScrimpAndSave]

Very useful information...thanks so much!