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THE
LIST
T-TIME
Will Rogers once said taxes have created more liars than golf.
April 15 is right around the corner, and that means it is time
to pay what our government says we owe. For the most part, there
haven’t been any sweeping changes in the federal tax code—at
least not yet—so the process should be fairly standard this
year.
Still, personal and business accountants are full of tax tips this
time of year to make filing less worrisome. One good tip: Don’t
fall for the refund-anticipation loans offered by tax preparers
who have teamed up with banks to loan you the amount of the return
while you wait for the IRS check. These days, with even the IRS
heavily promoting electronic filing and direct deposit, taking out
a loan to get your refund only a few days earlier seems pretty silly.
According to the Tax Foundation, most Americans work until mid-April
before they have earned enough money to pay off their total tax
bill for the year. It’s called Tax Freedom Day, and the good
news is that is has been coming earlier and earlier over the last
couple of years.
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TAX TIPS
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1. Beware the alternative minimum tax.
This is a parallel tax system devised years ago. But if you’re
subject to the alternative minimum tax, you can’t count
state taxes and property taxes as deductions, and you lose exemptions
for yourself and any children you claim as dependents.
2. Deduction choice. The IRS will allow you to choose
as a deduction either the sales taxes you paid or your state
income tax. It’s especially great news to those who live
in states with no income tax.
3. Mileage. The answer to the question everybody asks:
If you use your car for business, the reimbursement rate is
27.5 cents a mile. If you own a clean-fuel vehicle, the deduction
is $2,000.
4. Be careful with donations. If you itemize and made
a cash donation to a qualified charity—such as tsunami
relief—before January 31, you can count that in your return.
But don’t get too carried away. People have been abusive
when it comes to claiming cash donations and the IRS is taking
note.
5. Electronic filing. If you think you’re getting
money back, this is the way to go. Not only does your return
get to the IRS in seconds, but if you also opt for direct deposit,
you could get your refund in as little as a week. |
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