DonkeyHotey / Flickr
This is a post by BargainBabe.com writer Yazmin Cruz.
I know the last thing you want to think about during the holiday season is taxes. Alas, as the saying goes in this world nothing is certain but death and taxes – that’s why it’s prudent to start preparing now. I’ve compiled a list of things you need to do to save money on your taxes next year.
Feed your 401k – If you have an employer-based retirement plan make sure to max out your contributions especially if the company is
Taxes ware so high in Monopoly, as kids my sisters and I abolished it. Credit: alancleaver_2000/Flickr
End of year tax tips are rolling in. Below I paraphrased the best 15 tax tips that I received from Grant Thorton, TurboTax, H&R Block, and Free From Broke.
1. Get a tax question answered for FREE at FreeTaxQuestion.com through Jan. 31, 2011. It can be about personal, federal, state, or business taxes. You’ll get an email or personal call back at a time you request.
2. Understand how changes to FSA’s, HSA’s, and HRA’s due to the Affordable Care Act will affect your taxes.
3. Adjust timing of income and deductions. If tax rates are expected to rise next year, see what wiggle room you have to count income and deductions in the current tax year. Paying taxes now at a (more…)
Jeremy Brooks/Flickr
There are a few new credits you can use on your income tax returns, according to Wells Fargo. Check out these credits, which I’ve summarized from a Wells Fargo press release, before you take the standard deduction of $11,400 if you are married filing jointly, or $5,700 if you are single or married filing separately.
The cool thing about tax credits is that if you end up with a negative tax liability, you will get a check from the government!
Disclosure: I am not a tax professional. Consult with a tax professional or research these credits further if you believe you are eligible.
- Got a student in college or putting yourself through school? Check out the American Opportunity Credit, designed to replace and improve the Hope and Lifetime Learning Credit. Your can make as much as $160,000 for married couples filing jointly or $80,000 for single filers and still claim this credit. You can claim the first $2,000 you spend on college expenses and 25 percent of the next $2,000 to get a total credit of no more than $2,500.
- If you lost your job recently, you don’t have to pay taxes on the first $2,400 in unemployment benefits. The same goes for your spouse. Double unhappiness turns into double deductions!
- Buy a new car or sell one? You can deduct the sales tax you paid on your new car, truck or motor home as long as you purchased it after February 16th, 2009. You can deduct the taxes up to a purchase price of $49,500, but if you make a lot of money ($250,000 for married filing jointly), the credit slides downward.
- You do not need to report your financial gains from the Cash for Clunkers program as income.
- If you bought a fuel-efficient vehicle in 2009 you may be eligible for green tax credits.
- Are you a first time home buyer? You may be able to get 10% of the purchase price up to $8,000 back in credits. To qualify you must have bought your home between Jan 1, 2009 and April 30, 2010. You have to live in your home as your principle residence for at least three years or else pay back the credit. The government considers you a first time homebuyer if you have not owned a home as your principal residence in the past three years. There’s also a $6,500 credit if you traded up to a new principle residence. The credit applies to mobile and manufactured homes but not vacation properties. Some income restrictions apply.
If you have questions Wells Fargo’s tax center has more info.
Related posts on BargainBabe.com:
Tax calculator, forms, and tips
Where do your tax dollars go? (image)
Five questions to ask before hiring a tax pro
