Tuesday, March 29, 2011

Top Ten Tax Tips

1. Charitable Donations: most cell phones now can take pictures. Take a picture of all items donated. Keep an electronic copy of the pictures to prove if need be at a later date what you donated and that it was in good shape.
2. Mortgage companies are not required to report mortgage insurance premiums under $600 on a 1098. Check to see if you paid the premiums and if so what the amount was. You can deduct these on schedule A with your other itemized deductions.
3. If the FMV (fair market value) of stock is less than its basis, it would be better to sell the stock for a deductible capital loss. Then give the cash to charity instead of just donating the stock straight to the charity.
4.  Since there is no age restrictions and no minimum requirements, a Roth IRA  may be a good idea for a taxpayer expecting to work past retirement age.
5.  IF the taxpayer is behind on estimated payments for the year and taxpayer is an employee, withholding may be increased toward end of year to help make up the difference. Withholding is considered to be paid evenly throughout the year.
6.  Take advantage of an employer sponsored retirement plan (i.e. 401k) especially if there is a match. Depending on your income level you may receive a credit on your return based on a percentage on your contribution.
7.  Invest in a tax free Roth IRA for tax free growth. The only thing better is a employer match retirement fund.
8.  The Adoption Credit for 2011 is $13,360 and it is fully refundable. Need to make sure adoption is finalized by the end of 2011.
9.  The American Opportunity Credit is partially refundable up to $1,000, and total credit is up to $2,500. Take advantage of it. It is four the first four years of qualified education expenses for college. It expires 12-31-2012.
10.  The Payroll Tax Holiday. Employees and self employed individuals pay 2% less in social security taxes for the entire year of 2011. Take advantage of this and increase your 401k or other retirement account contributions by 2%. You wont even miss the money.

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