Tax Tips To Help You Save Money

Now is the time to start planning your tax strategies for next year. As you finalize your tax returns for the year 2000, I’m sure that much of your tax situation is fresh in your mind. Here are some tips to help you save the most money on taxes.

Hire Someone
Once you take that big step toward homeownership, the complexity of your tax return increases. There are probably a lot of deductions you may not be aware of, and a tax professional can help. While they do charge a fee for their service, the amount of money they can save you by structuring your financial situation correctly more than pays for their fee. Make sure you look for a tax attorney, CPA or enrolled agent (many of whom are former IRS officials). All three are allowed to go before the IRS to defend you, if needed.

Family Tax Credit
Some of you may have had your first child this year. Did you know that you might be eligible for a child tax credit? If you adopted children, then make sure you keep track of your expenses for the adoption. Those expenses may give you a tax credit.

Track Your Volunteer Miles
You’re allowed to deduct a per cents per mile for all of the volunteer miles you put on your car for your favorite charities. Keep track of this, as well as the pocket money you spend while volunteering.

Learn About New Education Credits
New education tax breaks have kicked in. So, be sure to have your tax preparer check those out, if you are enrolled in higher education.

Avoid Taxes On Home Sales
When you sell your home, you can exclude the profits up to $250,000 for a single person and $500,000 for married taxpayers. The catch is that you must have lived in the home for at least two years.

Penalty Deductions
If you’ve paid late charges or prepayment penalties on a mortgage, those can be deducted along with the mortgage interest you paid.

Disaster Area Deduction
If you are one of the unfortunate people who had the area their home is located in declared a “disaster area”, don’t forget to take the casualty losses for damages to your home that you had to repair.

Check Your Exemptions
Find out from your employer how many exemptions you claimed. This is especially important if you just purchased a home this year or last year. With the mortgage interest deduction, you may be able to claim more exemptions and take home more money from your paycheck every month without owing any money to the IRS at the end of the year. Your human resources department can give you a form to help you determine how many exemptions you should claim, or simply ask your tax professional

Don’t Panic If Cash Is Scarce
If you have a tax liability, there are several things that you can do. Many of you have equity in your home that you can access to pay tax liabilities. So, if you find yourself in this situation, remember, I’m just a phone call away!