Go over your taxes carefully to be sure you are taking all your deductions, and start early in the tax year. It’s too late on April 14.
Watch out for tax-breaks all year long. It’s too late to think of tax savings on April 14.Your local community offers an adult education tax course at night. For about ten dollars, it is money well spent. In the meantime you can begin planning taxes for the coming year.
- Everything you can’t sell, give away and take a tax deduction. Clean out your house and garage and have a yard sale. For details on claiming deductions for charitable donations call the IRS at 1-800-829-3676.
- Write a check for charity so you will have a record. If you do give cash ask for a receipt.
- Fight your property tax appraisal. With home prices dropping in many places, ask your county to justify rising assessments.
- Keep your home improvement receipts.These costs increase your basis in the home and reduce taxable gains when you sell.
- Claim every dependant. If you and other family members support a parent or other relative and they have medical expenses, decide who will claim the dependent. To claim the dependant you must pay the dependants bills and claim the dependant on your return. If you jointly support a parent but none of you pays more than half the support, you can file a multiple support agreement. (IRS form 2120.)
- Pay your local and state tax early. If you pay by Dec. 31, you can claim on this year’s federal tax.
- Fully fund your retirement plan. The money you put in your IRA is not currently taxable.
- Review your withholding. The amount of your withholding should be high enough to pay your tax but low enough to avoid lending your money to Uncle Sam for a year without interest.When dealing with the IRS, respond promptly to all correspondence. If you delay you could incur steep penalties and interest charges.
For free copies of IRS publications and forms, call 800-829-3676. Ask for publication 17, (Your Federal Income Tax.) and, publication 910, (Guide to Free Tax Service.)
Published in: Personal Finance