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Some Tax Tips


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#1 boopme

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Posted 27 February 2007 - 02:19 PM

Just a couple I thought are handy...

>Unless your 2006 income was less than $52,000, you'll probably have to pay to file electronically. That does provide you with a receipt for your return, and may speed up your refund by a few days, but really ... has the IRS ever lost your return before? If you owe taxes, there's scant, if any, advantage to e-filing. (If you did make less than $52,000 a year, you can file for free via the IRS's own Web site, www.irs.gov.) http://www.irs.gov/efile/article/0,,id=118986,00.html

The Free File program is a free federal tax preparation and electronic filing program for eligible taxpayers developed through a partnership between the Internal Revenue Service (IRS) and the Free File Alliance LLC, a group of private sector tax software companies. Since Free File’s debut in 2003, more than 15.4 million returns have been prepared and e-filed through the program. Free File allows taxpayers with an Adjusted Gross Income (AGI) of $52,000 or less in 2006 to e-file their federal tax returns for free. That means 70 percent of all taxpayers – 95 million taxpayers – can take advantage of the Free File program.

>See if you Qualify for
Telephone Excise Tax Refund
http://www.irs.gov/newsroom/article/0,,id=164032,00.html

>Head of Household
Don't file as "Single" if you qualify to file as "Head of Household." You will get a bigger refund if you file as Head of Household. If your ex-spouse claims your child as a dependent on his or her tax return, but the child lives with you, then you probably can still file as Head of Household. Also, if you can claim a parent, grandparent, nephew, niece, brother or sister as a dependent on your tax return, you can probably file as Head of Household.

> Match Your 1099s
Make sure that your tax return numbers match the 1099s you receive from your broker, employer, or investment company. The IRS receives a copy of all 1099s issued to you so they can match what's on your tax return with what is shown on the 1099s.

> Don't report interest earned on Series E, EE, or Treasury bonds/bills/notes on your state tax return: Remember that, while this interest is taxable for federal purposes, it is not taxable for state purposes. Remember to make the appropriate adjustment on your state tax return.

>Add your broker commissions and other fees to the cost of your stock.
Make sure to reduce your gross sales price by the amount of these expenses.

>Student Loan Interest
Did you pay interest on a student loan this year? If so, you might be able to reduce your income by the amount of the interest that you paid, to a maximum adjustment of $1,500. The interest must be paid in the first 60 months of the loan, and the loan must have been used for qualified education expenses. The beauty of this is that you do not have to itemize your deduction on Schedule A to claim the adjustment for student loan interest paid. For more information, read the instructions for Line 24 of Form 1040.

>Maximize your IRA contributions
You can contribute to 2006 up until April 2007

> My Favorite .. If you're getting a large tax refund, consider adjusting your federal income tax withholding on your paycheck. You'll get more now, and a smaller refund on next year's tax return. If your counting on that (pick a round number) $6000 Return. Why not take that 500 a month and pay some bills along the way. Instead of giving the Gov't a free loan with your $$ and then using it to catch up.
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#2 MaraM

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Posted 27 February 2007 - 05:36 PM

Just a wee question (I'm Canadian so things are a bit different here) ...

Just wondering if it's true that Americans get to claim the interest they pay towards their mortgage as a deduction on their personal income tax return?

If so, how I envy you! :thumbsup:
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#3 Orange Blossom

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Posted 27 February 2007 - 06:33 PM

The answer is: sometimes. There are a lot of variables involved, also the tax code changes. I don't know about the past couple years or so as I haven't had to file, but before then the mortgage deduction was available only if you itemized deductions. In my situation it never paid to itemize the deductions as I was always better off doing the standard deduction.

However, I do get a reduction in my property taxes because of the mortgage. Property tax rules are set up on a county-by-county basis with some control also by the state.

Orange Blossom :thumbsup:
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#4 MaraM

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Posted 27 February 2007 - 10:08 PM

Thanks for the info, Orange Blossom. I suspect our tax system may be vastly different in many ways but bet there are a lot of Americans that will appreciate all the data you've posted. :thumbsup:
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#5 Orange Blossom

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Posted 27 February 2007 - 10:25 PM

Actually, boopme posted the data :thumbsup: .
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#6 MaraM

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Posted 28 February 2007 - 02:27 AM

Huge duh to myself!!! I apologise and can only say that I even call my grandchildren by the wrong name at times - oh dear!
Never let your computer realize you are in a hurry or just typing the last few words of a vital document.

While outer events might make one happy or sad, happiness itself is entirely internal, and at all times completely within one's power.

#7 DSTM

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Posted 28 February 2007 - 03:19 AM

Huge duh to myself!!! I apologise and can only say that I even call my grandchildren by the wrong name at times - oh dear!

I was allways calling my grandchildren by the wrong names,MaraM. I fixed that problem real Quick.
I call my grandaughters,"Sweetie" or "Princess"
I call my grandsons,"Pally" or "Mate"
Try it,works like a treat for me,and they like the more Personal Touch. :flowers:

Bit off Topic but we all do it sometimes. :thumbsup:















#8 ddeerrff

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Posted 28 February 2007 - 12:31 PM

Back on topic, for those of you who do not qualify for free efile via the IRS's FreeFile program.....

You may want to take a look at TaxAct. Free federal efile regardless of AGI.

Personally, I 'do' my taxes with TaxCut, then transfer the data and file my federal via TaxAct. The state I am in has a freefile online, so the data I get using TaxCut gets transfered to there and my state also gets efiled for free.
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#9 Orange Blossom

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Posted 28 February 2007 - 06:22 PM

Another suggestion for those of you who file using tax preparation companies such as H and R Block. Don't go for the rapid refund as this is really a loan from the tax preparation company and you will pay a fee or interest on that rapid refund loan. If you are patient and wait for the refund from the govt. you will actually have a bit more money in the long term.

Another pointer: whether you have to file taxes or not Keep all tax related paperwork for several years. If the IRS claims that you owe taxes and you didn't file, the burden of proof lies with you and not them. Here is an example: Last year, I received a notice from the IRS claiming that I needed to file a return from couple years previously, I wrote back and said since I hadn't earned anything, I didn't need to file. Later they sent some more papers in which they stated I owed taxes on a rather sizeable chunk of money. Upon close examination, I realized that someone had messed up at the IRS end. They had interpreted my retirement account direct roll-over into an individual IRA as a distribution. Fortunately, I had all the paperwork and was able prove that I in fact did not owe any taxes. Oddly, I never heard back from them.

Another example: Several years ago when I was an undergraduate student I ran into a problem with the financial aid office. It turns out that they had lost their copy of my folks' tax return from some years previous. Fortunately, I had thought ahead and had copies of all those forms, so I had one to give to them. If I hadn't, there would have been endless difficulty which might have resulted in my not finishing my B.A.

Orange Blossom :thumbsup:
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#10 boopme

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Posted 28 February 2007 - 08:55 PM

Just wondering if it's true that Americans get to claim the interest they pay towards their mortgage as a deduction on their personal income tax return?

If you're filing jointly, you can deduct all your interest payments on a maximum of $1 million in mortgage debt secured by a first and second home. The maximums are halved for married taxpayers filing separately.

You can fully deduct points associated with a home purchase mortgage. You cannot deduct a mortgage broker's commission.

Refinanced mortgage points are also deductible, provided they are amortized over the life of the loan. Homeowners who refinance can immediately write off the balance of the old points and begin to amortize the new.
.................
Fully deductible interest. In most cases, you will be able to deduct all of your home mortgage interest. Whether it is all deductible depends on the date you took out the mortgage, the amount of the mortgage, and your use of its proceeds.

If all of your mortgages fit into one or more of the following three categories at all times during the year, you can deduct all of the interest on those mortgages. (If any one mortgage fits into more than one category, add the debt that fits in each category to your other debt in the same category.) If one or more of your mortgages does not fit into any of these categories, use Part II of this publication to figure the amount of interest you can deduct.

The three categories are as follows.
1>Mortgages you took out on or before October 13, 1987 (called grandfathered debt).

2>Mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt), but only if throughout 2006 these mortgages plus any grandfathered debt totaled $1 million or less ($500,000 or less if married filing separately).

3>Mortgages you took out after October 13, 1987, other than to buy, build, or improve your home (called home equity debt), but only if throughout 2006 these mortgages totaled $100,000 or less ($50,000 or less if married filing separately) and totaled no more than the fair market value of your home reduced by (1) and (2).

The dollar limits for the second and third categories apply to the combined mortgages on your main home and second home.
Full details in Publication 936 ...IRS.gov

Edited by boopme, 28 February 2007 - 08:56 PM.

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#11 Orange Blossom

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Posted 01 March 2007 - 12:10 AM

And of course, in order to deduct it you have to fill out the Itemized Deduction form, Schedule A which is available only with the 1040 long form.

In some cases, which has always been my situation, the total amount of the itemized deductions is less than the standardized deduction.

Oh, here's one for folks with student loans. There is a student loan deduction, and you don't have to itemize deductions in order to take this deduction. It is in addition to the standardized deduction. Student loan deduction

Orange Blossom :thumbsup:
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#12 stevealmighty

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Posted 01 March 2007 - 04:54 PM

Also, soldiers need to check with their installation JAG to see about tax free money for time deployed if it doesn't show up automatically (not that the government ever messes up anyones pay checks! :thumbsup: ) Most installations will have lawyers that will do your taxes for free if you're married, have dependents or are not filing the "EZ" form.

Disabled veterans should check with local (village, town, city, county and state) to see if they qualify for deductions. These deductions will vary for different areas/states. Example: In my county, I get a tax break on my home and property because I have a 30% comp rating from the Department of Veterans Affairs. Your town/city/county (go with county, they usually know more) clerk should be able to help you out on this.
War produces veterans, wounded both physically and mentally. They have sacrificed for us.....and it is now our job to help these veterans, as they have already helped us in ways we will never know, in ways that we cannot fathom, and in ways that we take granted every day.
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#13 Klinkaroo

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Posted 03 March 2007 - 10:45 PM

This reminds me of a good comedian that moved to Canada. When he moved here he said that the move fixed one big thing. He felt that in America he was severely under taxed. Now that problem is fixed :thumbsup:

Bloody taxes take away 50% of your salary in Canada... Thank god that I make under 12k and don't have to pay anything...

Edited by Klinkaroo, 03 March 2007 - 10:50 PM.


#14 boopme

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Posted 07 March 2007 - 04:47 PM

That's pretty funny Klink

1. Watch out for fraud e-mails...the IRS does not use e-mail to contact taxpayers

2. Beware of Roth IRA abuse scams...Some filers are encouraged to incorrectly underestimate the value of assets or stocks that are put into the IRA.
This circumvents the annual maximum contribution limit of $4,000 and allows otherwise taxable income to go untaxed.

3. Phone tax rebate...If you own a phone (including a cell phone) you're entitled to at least $30 back from Uncle Sam. The one-time refund is payback for an old telephone excise tax the government has been making people pay for a century.
You can get up to $60 for families of four or more. Claiming this standard credit will be much easier than digging up your phone bills for the past three-and-a-half years to figure out exactly how much you are owed.

4. Education spending...If you contribute to a 529 plan to save for your child's education, you may be in for a big fat tax deduction because some states allow you to deduct your contributions. See if your state is one of them at www.savingforcollege.com.

If you're already paying tuition, you're in for another big tax break. Qualified higher-education expenses are deductible for up to $4,000 in tuition and fees if your adjusted gross income is $65,000 or less or $130,000 for joint filers.

If your income is higher, that is, $80,000 or less for single filers, or $160,000 or less for married couples, you can deduct up to $2,000.
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#15 tacm

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Posted 09 March 2007 - 11:39 PM

Good info Thanx everyone
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