10 Ways to Save on Your Taxes This Year

ONE OF THE BEST PLACES TO LOOK FOR SAVINGS IS IN YOUR TAXES !!!

Filing your tax return is a once-a-year event but trimming your tax bill is something you can do right now.

If you managed to claim every possible tax break that you deserved when you filed your return this spring, pat yourself on the back. But don’t stop there. Those tax-filing maneuvers are certainly valuable, but you may be able to rack up even bigger savings through thoughtful tax planning all year round. The following ideas could really pay off in the months ahead:

1. Retirement account contributions are a top tax-reduction tool, as they serve two purposes. Most contributions (except the Roth individual retirement account) allow you to deduct from your taxable income the amount paid into the retirement account. This reduces your total taxable income. These funds also grow tax-free until retirement. If you start early, this strategy alone can secure your retirement.
2. Contribute to a health savings account if you have a high-deductible medical plan. The contributions unused for medical expenses can roll over indefinitely and grow tax-free (similar to the assets in a retirement account).
3. If you work for yourself or have a side business, don’t be afraid to take thehome office deduction. This allows you to deduct the percent of your home that is used for your business (on Schedule C, 1040). If the guest bedroom is used exclusively as a home office, and it constitutes one-fifth of your apartment’s living space, you can deduct one-fifth of rent and utility fees for your home office.
4. Self-employed individuals (either full time or part time) are eligible for scores of tax deductions. A few of those expenses include business-related vehicle mileage, shipping, advertising, website fees, percent of home Internet charges used for business, professional publications, dues, memberships, business-related travel, office supplies and any expenses incurred to run your business.
5. Tax credits are gold. They are deducted from the tax owed. The American Opportunity Tax Credit is available for all for years of college. You receive a tax credit on 100 percent of the first $2,000 spent on qualifying college expenses and 25 percent of the next $2,000 for a maximum of $2,500 per student. That’s $2,500 deducted from the amount of tax owed (as long as you meet certain income requirements regarding school courses that improve job skills).
6. The Lifetime Learning Credit is great for adults boosting their education and training. This credit is worth a maximum of $2,000 per year (up to 20 percent of up to $10,000 spent on post-high school education) and helps pay for college and educational expenses that improve your job skills.
7. Charitable deductions made with payroll deduction (such as the United Way), checks, cash and donations of goods and clothing are all deductible. These deductions add up and are often overlooked. Don’t forget to include the cash you give to the Salvation Army and the $20 you place in the collection plate at church each week.
8. If you are an adult child who is not claimed as a dependent by your parents, here is a possible tax break for you. If your parents pay back your student loans, the IRS assumes the money was given to the child, who then repaid the debt. Thus the young adult child can deduct up to $2,500 of student loan interest paid by his or her parents.
9. Become more energy efficient. The federal government encourages taxpayers to make their homes more energy efficient by offering credits for a variety of moves, including installing insulation, new windows or doors, and qualified heating and cooling systems. Certain alternative energy sources, like solar panels, are also eligible for tax credits.
10. See if you have any worthless securities. If you have a security that has become worthless – and it must be completely worthless, not just have filed for bankruptcy, for example – then you can deduct your loss. You treat the security as if you sold it on the last day of the year when it became worthless, and you have seven years to do so. That means you can check back for any securities that became worthless in 2007 or later.

Don’t miss the above mentioned tax deductions and credits, which can add up to significant savings over the years. At Buwe & Associates, our team of experts provides comprehensive, professional accounting and financial planning services for businesses and individuals in Fredericksburg andWoodbridge, Virginia. Contact Us to speak to one of our CPA’s and receive aFree Initial Financial Consultation.

With Buwe & Associates’ proactive and dedicated tax planning, compliance and tax preparation services, you can take the benefit of all the deductions and credits. Today’s complicated tax laws have made the filing of even simple returns confusing, so we keep ourselves current on new tax laws and legislation and minimize both your current and future tax liabilities.