Tips You Can Use to Lighten Your Tax Load
Spring is coming, and so is the annual income-tax deadline---April 15.
It's time to "make sure you're not paying Uncle Same more in
federal income taxes than you should", says Greg Greene, CPA, president of MoneySense
Financial Corporation in Dallas. "Fortunately, there are a number of steps you
can take--even this late in the game--to legally reduce your tax burden."
The Flowing tips can get you started in the right
direction." TAX
TIPS
- Look backward. Review your 1998 tax return before
preparing your 1999 return. It may remind you of tax matters or deductions you
forgot. For example: You may have applied your 1993 refund against 1994 taxes.
Include that as a tax payment on this year's return.
- Fund your IRA. An IRA offers tax-deferred interest,
even if your deposits can't be deducted because you participate in an employee savings or
pension plan. You have until April 17 to make an IRA deposit.
- Don't overlook home-related deductions. If you
purchased, sold or refinanced a house in 1999, check the closing statement for deductible
property taxes, interest, and points. Loan origination fees, or points, are
deductible if you borrowed money to buy or improve a house. If you re-financed, the
points can be amortized or deducted at an even rate over the loans's life. Plus: If
you refinanced for a second time, the undedicated points from the first refinancing are
fully deductible now.
- Claim your child-care credit. Child-care expanses
can generate tax credits if they're incurred so you can work or look for work. Don't
overlook these deductible expenses: Supervised bus-transportation costs to a
child-care center; the cost of food provided for a babysitter.
- Take your age and disability credit. If you are 65 or
older or permanently or totally disabled, you may be able to claim a tax credit.
- Rethink that refund. If you're due a refund this
year, decrease your withholding for 2000. Put this years refund in an interest-bearing
account when you receive it.
- Know about loans. Loan payments you receive aren't
income to you, and loans you make to others are not deductions.
- Check your check register. Your 1999 checking
account register may remind you of charitable donations or business-related or other
miscellaneous deductions.
- Figure all your charitable contributions.
Charitable contributions, such as food and used clothing, are deductible.
Deduct the value of the items at the time of contribution. Don't forget to
check your credit card receipts or monthly record for charged contributions.
- Remember to deduct out-of-pocket expenses if you're a
volunteer for a charitable organization. For example: Deduct 14 cents a
mile--plus tolls and parking--if you drive to a location where you do the volunteer
service.
- Check for FICA fat. If you changed jobs during 1999
and your total wages exceeded $72,000, to much Social Security tax probably was withheld
from your salary. Such an excess payment is a credit against your tax liability.
- Stock savings. Properly calculate your gain or loss
if you sold stock during 1999. You need to know the original cost, the purchase
date, how much you sold it for and the sale date.
- Get help if you need it. Use a professional tax
prepare if you don't fully understand your tax situation or your tax return. The
savings in tax payments usually will exceed the fee. When working with at ax
preparer, organize your records, bring them in at one time and get an estimate of the fee
and completion date upfront.
- Finally, file early. "File before the April crunch
if you're expecting a refund. If you do, you should receive your refund in four
weeks instead of eight weeks," Greene says.
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