Taxes Made Easy
Saving money is always a good thing.
But when it comes to your taxes, it can seem like you’re stuck paying the amount you are told to pay. However, this is simply not the case.
While the tax code is rigid and there are a lot of rules to follow, the truth is that many people don’t take the time to learn how the rules work and how they can work to their advantage.
Often, there are rules that can help to lower your annual gross income so that you’re not only lessening your taxes, but also getting a larger return for that vacation you’ve always wanted to take.
First of all, what you need to realize is that there are two different kinds of deductions that are listed in tax law – deductions and tax credits.
Deductions are those costs that are subtracted from your gross income on the front side of a tax form before anything else is taken off. These help to lower your tax bracket first along with the standardized deductions that everyone has on their forms.
Tax credits are those deductions that come directly off of the amount you are to be taxed. Obviously, these are much more significant and will help to dramatically lower your taxes owed.
When you look at a basic 1040 form, which the usual form that most individuals use, you will notice that on the front of the form, you can take deductions for the following:
That is, those people who are dependent on you. You get a tax break for them. This is generally going to be one or two if you don’t have any children (single or married correspond with one and two).
You might also reduce the taxes you owe at the end of the year by reducing the exemptions you claim on your initial W-2 form.
Instead of claiming ‘1,’ you might want to claim ‘0.’ This maximizes the amount of taxes that are taken from your paycheck.
There are also standard deductions that everyone can take. Some of these include (for the 2007 tax year):
Single deduction: $5350
Married, filing separately deduction: $5350
Married, filing jointly: $10700
Head of Household: $7850
Each year these deductions seem to go up and help ease the burden of taxes on everyone in some way.
These deductions will go on Schedule A to help reduce your gross income:
If you have a lot of medical expenses, you will want to keep receipts and make sure to enter the totals here. What can and can cannot include in this total varies per year, so you will want to check with the IRS to see what the current rules are. These costs cannot be something that was reimbursed by your health insurance company or by another else.
Taxes that you already paid
If you already paid estimated taxes, you will want to make sure that you are listing that total. This can be money that you sent the IRS to help with this section or it can be associated with a business.’
Home mortgage interest and points
If you own a home, you can reduce your income by adding in the interest that you paid on your mortgage. This is taken off along with any points associated with your mortgage value.
The trick to charity is that you really do have to give a lot in order to make a difference on your taxes. You also need to be sure that you are giving to registered charities in order to have it ‘count’ with the IRS. Make sure that you get the receipts from all of your donations and place the total here.
Casualty and theft losses.
If you were a victim of theft, you might be able to recuperate some of the losses here. This can be a difficult deduction to justify, so be sure you have the help of a professional tax preparer before you fill in this section yourself.
Outside of a small business, if you work for someone else and you can deduct costs for supplies associated with your job here. This can also include education costs associated with getting more training for your job or for a future job in which you could make more money.
While tax credits can’t help you to increase your refund, they can eliminate the tax you owe.
Various tax credits that you can take off of individual taxes include:
Earned income tax credit
This is a credit that you can qualify for if you have dependents and your income level falls below a certain level.
Child care tax credit
Like the earned income credit, this is taken if your income falls below a certain level.
Hope tax credit/Lifelong Learning Credit
This is a tax credit that helps people who are returning to school pay for their costs.
Elderly tax credit
If you are 65 or older, you can qualify for this credit. You can also help reduce your overall taxes by:
Getting the alternative energy tax credit for installing certain environmentally friendly energy producers.
When you install solar panels and begin to create your own source of energy, it’s the law that anything additional you make can be sold to the local energy companies for a profit.
Talk with a CPA or a tax professional about how this can work in your favor. Not only are you cutting down on your energy costs, but the tax breaks come from the initial investments you make in very expensive equipment.
Buying a hybrid car
While these deductions are slowly being phased out, you might want to still check to see if you can qualify with your hybrid car purchase or upgrades.
Paying interest on your student loans
If you began to pay off your student interest before you were out of school, you were doing yourself a tax favor. In addition, if you are making payments that not only attack the principle, but also the interest, the interest payments are all deductible. The government will send you a ticket at the end of the year of the total amount.
Investing in your company’s 401K plan as this cost comes off of your income before taxes. While this isn’t actually a deduction, when you put money toward a savings plan before taxes, you are reducing the amount of money to be taxed and thus reducing your taxes owed.
Buying into your company’s health insurance plan as this cost comes off of your income before taxes. This is the same deal as when you pay into your company’s 401K plan.
Talk with your tax preparer to see what else you might qualify for in order to reduce your tax.
Here is What You Will Learn Inside…
Individual Tax Saving Ideas
Tax Saving Measures for Business
The Tax Audit.
The Ins and Outs of Federal Payroll Taxes
Why People File Taxes Online
What Are Your County Property Taxes Used For?
Offering Personal Financial Advice -Ameriprise Financial Services
Using Free Tax Preparation Software
Consulting Tax Attorneys – Tax Law Specialists
Delinquent Property Taxes- Three Steps to Deal with Your Delinquent Property Taxes
Federal Income Taxes – How to Deal with Federal Income Taxes?
File State Taxes- E-File System Is the Best Way to File Your State Taxes
Filing Income Taxes- How to File Income Taxes?
Financial Planning Software- Nine Benefits of Financial Planning Software
Free Taxes- Benefits of Filing Free Taxes Online
Income Tax Forms- Three Must to Follow If You Desire to Fill Your Income Tax Forms Yourself
LLC Tax Savings- How to Avail LLC Tax Savings
Benefits Of Online Tax Forms Over Traditional Methods
Save On Taxes by Refinancing Your Mortgage
Save On Taxes by Spending Less on Credit
Save On Taxes by Investing in Life Insurance
Save On Taxes: Hot Tips
Save On Taxes with Tax Deductions
Federal Tax Law 2005 For Nonprofit Organizations
Understanding California State Taxes
Make Your Personal Finances Work for You
The Importance of Acquiring a Financial Planning Certificate
Social Development and Financial Planning
An Overview of Hennepin County Property Taxes
Kentucky State Taxes
Maryland State Taxes
Ohio State Taxes
UBS Financial Services for Small and Large Business
What Is A VP Financial Planner?…
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