“Perfect for middle-income taxpayers who deserve a break-but
the IRS isn’t going to call and let you know you missed them.”
“I want the IRS to write you a check for a $1,000.00 more next year than they will this year,” Don Fuener.
The number one budget item for the average American household today is their taxes. You will spend more money on taxes then you will for your mortgage or other housing expenses. In fact taxes take such a big bite out of your take home pay, you will spend more money on taxes then food, clothing, and automobile expenses, combined. The most insidious part of taxes is that they confiscate the money before you see it. You don’t even have the luxury of writing a check for your taxes. Your taxes are withheld from your paycheck. The difference of the gross amount on your paycheck and the net amount is growing more each year. Our goal is to help you increase your net amount each payday.
We have compiled a list of strategies that you can use to lower your tax bill. The suggestions are broad and available to virtually any taxpayer. Of course if you have questions, please feel free to call us. We will be glad to discuss your specific tax situation and help you increase your refund by our $1,000.00 goal.
KEEP BULLET PROOF RECORDS. We know that you don’t live your life in income tax mode, but the key to all savings is good record keeping. Poor record keeping shouldn’t be the reason you miss a deduction. Because after all the IRS isn’t going to call you up after receiving your return and say oops, you missed that one. You certainly don’t have to keep every scrap of paper, but if that paper; or credit card statement, pertains to mutual funds invested, or a charitable contribution to the Salvation Army, hold on tight. The IRS counts on you to not be a good record keeper. Otherwise, it wouldn’t audit taxpayer’s returns. Beat the IRS at their own game. Try one of the new computer financial programs such as Microsoft Money or Quicken. By entering information on the computer regularly, you can generate tax deduction reports at year end. Or, if the computer programs are not your style, try the envelope approach. Strategically place a 9 x 12 envelope in your home or office and label it tax deductions. Throughout the year, stash in the envelope canceled checks, cash receipts and other items that relate to your taxes. Plan on spending an hour or two in January, to sort and total the receipts and canceled checks by category of expense. If you have stock, bond or mutual fund investments, gather all 12 months of statements you received and file them in a file folder marked with the investment name on the folder. Keep the investment file folders indefinitely. You then have access to your cost basis in that investment when you sell them. Reward yourself when you are done. Not only have you met IRS record keeping requirements, but you probably found deductions from last year that you forgot.
CHARITABLE DEDUCTION RECORD KEEPING TIP. Receipts from the charitable organization are now necessary. However, you do not need a receipt if you have a copy of a canceled check from that organization.
Extra bonus tips for charitable deductions: auto expenses. If you volunteer for a charitable organization and you use your automobile for that organization, you are entitled to a deduction based on your mileage for that organization. Boy Scouts, 4-H, Sunday School, and similar organizations count. Keep a record on a calendar to back up your deduction. Here is one tax savings deduction tip maybe you haven’t realized you’re able to take on this year’s income tax return. Did you contribute some old clothes or household goods to a Goodwill or similar drop box this year? A receipt is not required if you deposit property at a charity’s unattended drop site unless you claim that the property is worth more than $250.00. However, you must maintain a written record of the contributions, listing the items contributed and the date and location of the contribution. You are required to file form 8283, Non Cash Charitable Contribution if you claim a deduction of over $500 for non cash contribution. Additional rules apply for non cash contributions over $5,000. Questions? Please feel free to call our office.
TAX CREDITS, WHY YOU SHOULD LOVE THOSE CREDITS. More important than any deduction on your tax return are tax credits. Learn to love those credits. Why? Because credits give you a dollar for dollar reduction in your taxes. Deductions only reduce the income before taxes based on your individual tax rate. Tax credits come in various flavors. Do you have a dependent under the age of 17? You are entitled to a $1000.00 credit for each eligible child. Pay child care expenses for your under 13 year old so you can work? You are entitled to credit of up to $1,050.00 for those child care expenses paid. Do you have a dependent who is attending college? You may be entitled to a refundable credit of up to $2,500.00 per dependent for college tuition and other expenses paid.
“I want the IRS to write you a check for a $1,000.00 more next year than they will this year,” Don Fuener.
The number one budget item for the average American household today is their taxes. You will spend more money on taxes then you will for your mortgage or other housing expenses. In fact taxes take such a big bite out of your take home pay, you will spend more money on taxes then food, clothing, and automobile expenses, combined. The most insidious part of taxes is that they confiscate the money before you see it. You don’t even have the luxury of writing a check for your taxes. Your taxes are withheld from your paycheck. The difference of the gross amount on your paycheck and the net amount is growing more each year. Our goal is to help you increase your net amount each payday.
We have compiled a list of strategies that you can use to lower your tax bill. The suggestions are broad and available to virtually any taxpayer. Of course if you have questions, please feel free to call us. We will be glad to discuss your specific tax situation and help you increase your refund by our $1,000.00 goal.
KEEP BULLET PROOF RECORDS. We know that you don’t live your life in income tax mode, but the key to all savings is good record keeping. Poor record keeping shouldn’t be the reason you miss a deduction. Because after all the IRS isn’t going to call you up after receiving your return and say oops, you missed that one. You certainly don’t have to keep every scrap of paper, but if that paper; or credit card statement, pertains to mutual funds invested, or a charitable contribution to the Salvation Army, hold on tight. The IRS counts on you to not be a good record keeper. Otherwise, it wouldn’t audit taxpayer’s returns. Beat the IRS at their own game. Try one of the new computer financial programs such as Microsoft Money or Quicken. By entering information on the computer regularly, you can generate tax deduction reports at year end. Or, if the computer programs are not your style, try the envelope approach. Strategically place a 9 x 12 envelope in your home or office and label it tax deductions. Throughout the year, stash in the envelope canceled checks, cash receipts and other items that relate to your taxes. Plan on spending an hour or two in January, to sort and total the receipts and canceled checks by category of expense. If you have stock, bond or mutual fund investments, gather all 12 months of statements you received and file them in a file folder marked with the investment name on the folder. Keep the investment file folders indefinitely. You then have access to your cost basis in that investment when you sell them. Reward yourself when you are done. Not only have you met IRS record keeping requirements, but you probably found deductions from last year that you forgot.
CHARITABLE DEDUCTION RECORD KEEPING TIP. Receipts from the charitable organization are now necessary. However, you do not need a receipt if you have a copy of a canceled check from that organization.
Extra bonus tips for charitable deductions: auto expenses. If you volunteer for a charitable organization and you use your automobile for that organization, you are entitled to a deduction based on your mileage for that organization. Boy Scouts, 4-H, Sunday School, and similar organizations count. Keep a record on a calendar to back up your deduction. Here is one tax savings deduction tip maybe you haven’t realized you’re able to take on this year’s income tax return. Did you contribute some old clothes or household goods to a Goodwill or similar drop box this year? A receipt is not required if you deposit property at a charity’s unattended drop site unless you claim that the property is worth more than $250.00. However, you must maintain a written record of the contributions, listing the items contributed and the date and location of the contribution. You are required to file form 8283, Non Cash Charitable Contribution if you claim a deduction of over $500 for non cash contribution. Additional rules apply for non cash contributions over $5,000. Questions? Please feel free to call our office.
TAX CREDITS, WHY YOU SHOULD LOVE THOSE CREDITS. More important than any deduction on your tax return are tax credits. Learn to love those credits. Why? Because credits give you a dollar for dollar reduction in your taxes. Deductions only reduce the income before taxes based on your individual tax rate. Tax credits come in various flavors. Do you have a dependent under the age of 17? You are entitled to a $1000.00 credit for each eligible child. Pay child care expenses for your under 13 year old so you can work? You are entitled to credit of up to $1,050.00 for those child care expenses paid. Do you have a dependent who is attending college? You may be entitled to a refundable credit of up to $2,500.00 per dependent for college tuition and other expenses paid.
There is one credit that any taxpayer can take advantage of no matter what tax
return they file-short or long-the Life Time Learning Credit. We call it the
“eight to 88” credit because anyone can take advantage of this credit. The
credit is available for any tuition and fees’ expenses as long as the classes
are part of a course of instruction to acquire or improve job skills. Tuition
and fees for undergraduate or graduate school can be claimed for more than one
course. There is no limit of the number of years that the credit can be claimed
for each student. The maximum amount of credit is $2,000.00.
The IRS has placed income limits on who can claim the educational credits. But don’t give up. You can still deduct your higher education expenses even if you don’t itemize deductions on schedule A. Our computer system automatically figures the correct amount credit or deduction to give you the best benefit.
DON’T STAND FOR BIG REFUNDS. It is hard to believe that the same people who have the least amount money strive to get the largest refunds...deliberately. Thinking that a refund is some sort of savings account, these taxpayers actually ask their employer to withhold extra tax dollars so their refund will be larger. REALITY CHECK. A tax refund is nothing more than an interest free loan of your money to the government. And when it comes time to get your money, it is really tough to get back. You have to file an income tax return to get it, wait six weeks for the refund, or pay extra to file it electronically. The smart taxpayer figures their withholding so that they can use their money all year long instead of having the IRS hold on to it.
ARE YOU ELIGIBLE TO RECEIVE EARNED INCOME CREDIT? You do not have to wait to file your income tax return to receive your earned income credit. Your employer can advance you the earned income credit you are entitled to each paycheck. Employers encourage employees to take the advanced income credit, since it reduces their tax liability.
NEED A SHORT TERM EMERGENCY LOAN? You can change your withholding to reduce the amount of federal income tax withheld from your paycheck temporarily. Use the extra money to pay the unexpected bill. Later, you are allowed to change your withholding back to make up the difference.
Extra bonus IRS secret...the IRS doesn’t charge interest as long as you pay you entire tax liability from your paycheck. The IRS doesn’t care if you do it all at once or equally during the year. Payments from withholding are treated as being paid equally all year long, no matter when they were actually paid.
PARTICIPATE IN YOUR EMPLOYER’S CAFETERIA PLAN. Payments for day care expenses and other insurance payments can be made with pretax dollars when you participate in your employer’s cafeteria plan. The idea is that you will have to pay these expenses anyway, so why not use dollars that are not taxed to pay for them? Even better is the fact that you not only have an opportunity to save up to 42% in income tax savings, you also do not have to pay Social Security-Medicare taxes on your cafeteria plan payments. Your total tax savings can be as much as 49 %.
CONTRIBUTE TO YOU EMPLOYER’S TAX SAVING PLAN. If your employer offers a 401 K, 403 B or deferred compensation plan, contribute to it. Your employer’s savings plans are almost painless because they take the money away from you through payroll deduction. You get an immediate up to 42% return (tax savings) and tax deferred earnings for your contributions. Some employers even match your contribution, tax free. When your employer matches your contribution, you get even more bang and tax savings for the punch.
FINAL EXTRA BONUS TIP---Using a tax preparer saves money. Of course we want you to use us. There is no substitute for experience. $89.00 tax return preparation software programs can’t match our ability to apply the current, ever-changing tax laws, to your individual tax situation. Even more important is the fact that if the IRS calls, we are here to help. We call it our “sleep at night guarantee.” Each day we help clients with IRS problems that they can’t solve themselves. We know how to make the system work for you. Our tax professionals are friendly. We don’t speak tax geek, unless we have to. We are here to help you this year prepare your taxes. We appreciate your interest, and look forward to working with you.
The IRS has placed income limits on who can claim the educational credits. But don’t give up. You can still deduct your higher education expenses even if you don’t itemize deductions on schedule A. Our computer system automatically figures the correct amount credit or deduction to give you the best benefit.
DON’T STAND FOR BIG REFUNDS. It is hard to believe that the same people who have the least amount money strive to get the largest refunds...deliberately. Thinking that a refund is some sort of savings account, these taxpayers actually ask their employer to withhold extra tax dollars so their refund will be larger. REALITY CHECK. A tax refund is nothing more than an interest free loan of your money to the government. And when it comes time to get your money, it is really tough to get back. You have to file an income tax return to get it, wait six weeks for the refund, or pay extra to file it electronically. The smart taxpayer figures their withholding so that they can use their money all year long instead of having the IRS hold on to it.
ARE YOU ELIGIBLE TO RECEIVE EARNED INCOME CREDIT? You do not have to wait to file your income tax return to receive your earned income credit. Your employer can advance you the earned income credit you are entitled to each paycheck. Employers encourage employees to take the advanced income credit, since it reduces their tax liability.
NEED A SHORT TERM EMERGENCY LOAN? You can change your withholding to reduce the amount of federal income tax withheld from your paycheck temporarily. Use the extra money to pay the unexpected bill. Later, you are allowed to change your withholding back to make up the difference.
Extra bonus IRS secret...the IRS doesn’t charge interest as long as you pay you entire tax liability from your paycheck. The IRS doesn’t care if you do it all at once or equally during the year. Payments from withholding are treated as being paid equally all year long, no matter when they were actually paid.
PARTICIPATE IN YOUR EMPLOYER’S CAFETERIA PLAN. Payments for day care expenses and other insurance payments can be made with pretax dollars when you participate in your employer’s cafeteria plan. The idea is that you will have to pay these expenses anyway, so why not use dollars that are not taxed to pay for them? Even better is the fact that you not only have an opportunity to save up to 42% in income tax savings, you also do not have to pay Social Security-Medicare taxes on your cafeteria plan payments. Your total tax savings can be as much as 49 %.
CONTRIBUTE TO YOU EMPLOYER’S TAX SAVING PLAN. If your employer offers a 401 K, 403 B or deferred compensation plan, contribute to it. Your employer’s savings plans are almost painless because they take the money away from you through payroll deduction. You get an immediate up to 42% return (tax savings) and tax deferred earnings for your contributions. Some employers even match your contribution, tax free. When your employer matches your contribution, you get even more bang and tax savings for the punch.
FINAL EXTRA BONUS TIP---Using a tax preparer saves money. Of course we want you to use us. There is no substitute for experience. $89.00 tax return preparation software programs can’t match our ability to apply the current, ever-changing tax laws, to your individual tax situation. Even more important is the fact that if the IRS calls, we are here to help. We call it our “sleep at night guarantee.” Each day we help clients with IRS problems that they can’t solve themselves. We know how to make the system work for you. Our tax professionals are friendly. We don’t speak tax geek, unless we have to. We are here to help you this year prepare your taxes. We appreciate your interest, and look forward to working with you.
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