Stop! Medical expenses can lower your taxes. Credit: TruthOut.org/Flickr
Keith Mendonsa, a tax expert from eHealthInsurance.com, shared the following four ways to reduce your taxes with health-related expenses. Consult an accountant or certified tax professional for more information about how these four tax deductions apply to you.
- Health tax deductions: A new deduction this year and only this year let’s self-employed persons deduct the cost of their health insurance premiums from their self-employment taxes on Schedule SE.
- Got self-employment income? “You may also be able to deduct health insurance premiums you paid for yourself and your dependents as an ‘above the line’ business expense (that is, without itemizing) on your federal tax return,” Mendonsa said in an email. You cannot deduct premiums paid during (more…)
Here are five ways to file for free. Get tax forms here or visit your local post office. The deadline to file taxes this year is Apr. 18, 2011.
1. IRS Free File. If you make less than $58,000, you are eligible to file your federal taxes for free using the IRS Free File program. Some 100 million Americans are eligible to use IRS Free File. The program walks you through the entire process and does the math for you. You can get a refund in as little as 10 days if you opt for direct deposit. This service is also available in Spanish.
To file your taxes for free click on the above link, then click on “Free File” on the right under Filing and Payments. Choose one of the Free File Alliance members that comes up that meets your tax needs. Once you pick a company you’ll be transferred to the company’s website to work on and file your taxes. If you do not have Internet access at home, there are many locations across the country where you can use the Free File software.
2. Free Fillable Forms. There are no income limits when you (more…)
blmurch / Flickr
This is a post by BargainBabe.com writer Yazmin Cruz.
Tax season is upon us and if you are contemplating doing your taxes to save money, think again. Doing your own taxes may not save you money, especially if you don’t know the difference between a tax credit and a tax deduction. Here’s how to find out if you should be doing you taxes or paying someone else to do them for you.
Consider this: If the time and money you spend doing your taxes costs more than hiring a professional, then (more…)
A college student can be worth $2,500 under the American Opportunity Credit.
Last week I wrote about three educational and energy credits that reduce your taxes. I mentioned one deduction, too. So what’s the difference between a tax credit and a tax deduction?
A tax credit directly reduces the taxes you owe. So if you do your taxes and owe Uncle Sam $5,000, a $2,500 tax credit means you pay just $2,500 in taxes.
A tax deduction reduces your taxable income, which is what determines how much tax you pay. So if your gross income was $45,000, a $2,000 tax deduction means you pay taxes on $43,000.
In short, a tax credit saves you a lot more money than a tax deduction, so never skip a chance to claim a valid tax credit. Got questions? Leave a comment and I’ll do my best to answer.
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…)
David Reber's Hammer Photographer/Flickr
Here are three places where you can file your taxes online for free.If you are doing your taxes yourself, check out these basic tax tips to get started. If you are hiring a tax professional, make sure to ask these five questions.
Okay, here is how to file your taxes online for free.
Option No. 1. You can file your federal returns for free using the traditional IRS Free File, which offers step-by-step help if your adjusted gross income is $56,000 or less (this number could vary slightly for 2009). The software puts your answers directly into the forms and does the math for you. You can get a refund in as quickly as 10 days if you opt for direct deposit. This service is also available in Spanish.
Option No. 2. You can fill in your own tax forms without the help of software using the Free Fillable Forms, thanks to a partnership between the IRS and the Free File Alliance LLC, a group of private sector tax software companies.. This hands-off approach lets you prepare and e-file your 1040, 1040 A and 1040EZ federal returns. There are no income limits as with Option No. 1. State forms are not included.
Option No. 3. If you are a senior, you can get free tax preparation and filing help through AARP.
If your returns are complicated and you want to buy Turbo Tax or another program, remember to use a tax software coupon code!
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.Theres 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’stax centerhas more info.
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Tax calculator, forms, and tips
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Five questions to ask before hiring a tax pro
