How To Pay Less Next Tax Time (Legally)
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(NAPSI)—Getting a big check may not always be a good thing. For example, if you receive a large tax refund from the IRS, it means you paid out too much in income tax the year before and, essentially, lent your money to the government interest free.
Fortunately, a talk with a licensed tax specialist before the end of the year may help you avoid both that and having to pay a lot next tax time.
Here are a few hints on how:
<strong style="mso-bidi-font-weight:normal">• Make sure your W-4 form</strong> at work is up to date and filled out in your favor. Does it have the correct number for your dependents?
<strong style="mso-bidi-font-weight:normal">• Institute, increase or max out retirement contributions.</strong> Contribute more to your 401(k) to reduce your taxable income and your tax bill. If you don’t have one, or an IRA, now might be a good time to start.
<strong style="mso-bidi-font-weight:normal">• Be generous.</strong> Charitable gifts and certain presents to relatives may yield tax benefits. In addition to money gifts, donating clothes, toys and household items to charity can lead to a tax deduction. Keep a list of what you gave and its fair market value and get a receipt from the organization. You may also be able to deduct travel and other expenses of volunteering.
<strong style="mso-bidi-font-weight:normal">• Mix business with pleasure.</strong> If you can combine a vacation and business trip, you may be able to deduct part of the unreimbursed expenses spent on business, such as airfare and part of your hotel bill.
<strong style="mso-bidi-font-weight:normal">• Use health care to improve your wealth.</strong> If you can, tap into a medical reimbursement account or flex plan at work that lets you divert part of your salary, pretax, to an account from which to pay medical bills.
<strong style="mso-bidi-font-weight:normal">• Looking for work?</strong> Job search expenses such as agency fees, résumé printing, career counseling costs and travel related to the effort may be deductible even if you didn’t find a new job. If you do find one that meets the 50-mile test, you may be able to deduct your moving expenses.
<strong style="mso-bidi-font-weight:normal">• Go green.</strong> Some energy-saving devices and appliances also come with a tax break.
<strong style="mso-bidi-font-weight:normal">• Be smart, go to school.</strong> You may be able to get a tax credit on 100 percent of the first $2,000 spent on certain college expenses and 25 percent of the next $2,000 for up to $2,500 per student.
<strong style="mso-bidi-font-weight:normal">• Get more good advice</strong> from an enrolled agent and member of the National Association of Enrolled Agents—a group of licensed tax practitioners who focus solely on taxation year-round. To find one nearby, call (855) 880-6232 or visit <a href="http://www.eatax.org/">www.eatax.org</a>.
On the Net:<a href="http://www.napsnet.com">North American Precis Syndicate, Inc.(NAPSI)</a>