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Know the Federal Income Tax Law to Claim All Your Deductions
from:Each year, thousands of tax filers miss deductions to which they were entitled simply because they failed to know the federal income tax law. There are many ways to save on your tax bill, but you must understand the federal income tax laws as they apply to you. Here are some of the allowable deductions allowed under federal income tax law.
You Can Reduce Your Tax Bill By Saving for Retirement – We all know we need to save for retirement, but not everyone is aware that saving for retirement is also a great way to save on taxes right now. By saving for retirement, you’re reducing your adjusted gross income, thereby reducing the income you have to pay taxes on. Any money contributed to a 401k is contributed on a before tax basis. In addition, money you contribute to a private IRA can be deducted at the end of the year. Federal income tax law does, however, have limitations on the amount you can contribute tax free each year.
Get a mortgage – Owning your own home is one of the biggest tax savings opportunities. The interest you pay on your mortgage is tax deductible, and in the first few years of a mortgage, most of your house payments go to interest, so you can save a bundle. If you already own your home, but have other debts, like a car payment or credit cards; consider taking out a home equity line and using the money to pay off those other debts. According to federal income tax law, just like a primary mortgage, the interest you pay on your home equity loan is tax deductible, but the interest you pay on credit cards and car loans is not.
Go green – According to federal income tax law, many of your energy efficient purchases come with tax deductions. When you purchase home products, like replacement windows or a hot water heater, be sure they come with the government’s energy star rating. Items with the energy star rating are subject to tax deductions of about 10% of the purchase price in most cases. Replacement windows, however, have a maximum deduction of $200, regardless of the cost. Purchasing energy efficient cars, such as hybrids, qualify for tax deductions too. And, just think, in addition to the money you’re saving on your taxes, these energy efficient products will save you money every year.
Contribute to Charity – Charitable donations are tax deductible. And the federal income tax laws regarding charitable donations don’t just apply to cash donations, either. When you donate items like clothing and household items to charities that accept them, you can donate the value of the items donated. Just be certain to get a receipt for your tax records.
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Federal Income Tax Law News
Estate Tax Changes (Mondaq)
Under current law, the first $2 million of an individual's estate will pass without incurring federal estate taxes. (This is referred to as the "federal estate tax exclusion amount".)
Read more...Tax preparation volunteer group seeks new helpers (Today's Sunbeam)
Do you like helping people? Like helping people put money in their pockets? Than being a VITA volunteer may be designed just for you. VITA is the Volunteer Return Preparation Program that works with the Internal Revenue Service to help low- to moderate-income residents receive free tax preparation.
Read more...New tax rules add to anxiety for small businesses (Los Angeles Times)
Changes for 2008 and uncertainty about '09 have firms on edge and experts altering their usual year-end advice. Small-business owners are having a tough time trying to figure out the best year-end tax strategies for 2008 as the global financial meltdown turns conventional planning wisdom on its head.
Read more...TAX-NEWS.COM (Tax-News.com)
Taxpayers in the United States who make qualifying cash contributions for disaster relief efforts in the Midwest could benefit from a recently passed law that suspends the percentage-of-income limits that would normally apply when taxpayers deduct the contributions on their 2008 federal tax returns, the Internal Revenue Service has announced.
Read more...Illegal workers manage to skirt Ariz. employer-sanctions law (The Arizona Republic)
They're turning to options like the underground, or cash, economy to help them circumvent the law.
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