7 Tax-Saving Tips & Top 10 Outlandish Tax Expenditures
by www.SixWise.com
Tax day is April 15, and it’s reported that one in five Americans waits until the final week before the deadline to file their tax return. If you’re among this 20 percent, there’s good news: you can still save even more money on your tax return!
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It’s time to pay Uncle Sam ... fortunately, there’s still time to cut your 2009 tax bill!
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How?
By making sure you haven’t overlooked any of these important 2009 tax-saving tips!
1. Energy-Efficient Home Improvements
Did you add insulation to your house? Install energy-efficient windows, doors or skylights in 2009? If so, you qualify for the Home-Energy Tax Credit, which means you get a tax credit of 30% of the cost, up to $1,500! This is a tax credit, not merely a deduction, so it will directly reduce the amount of tax you owe.
If you’re planning energy-efficient improvements this year, don’t fret. Improvements made in 2010 can be claimed on your 2010 return.
2. Homebuyer Credits
If you’re thinking of buying a home, you can still take advantage of the unprecedented dollar-for-dollar tax credit of up to $8,000 if you’re a first-time homebuyer. If you already own a home, and have lived their for five of eight years before the new home’s purchase, you will also qualify for a $6,500 tax credit.
The credit is available through July 1, 2010 as long as you have a contract in place before May 1, 2010. You can use the credit on either your 2009 or 2010 taxes.
3. Charitable Donations
Did you give to charities or even family members in 2009? You and your spouse can give up to $13,000 each without having to pay gift taxes. You can also write off monetary and non-cash charitable contributions if you itemize your expenses.
You must have documentation of any cash donations over $250 and a receipt for noncash donations of $500 or more. You can also include costs you incurred to help a charity, such as transportation costs while volunteering (you can deduct 14 cents per mile).
4. Max out Your IRA Contributions
Every contribution you make will lower your taxable income and boost your retirement savings. The IRA contribution limit is $5,000 or $6,000 if you are over 50, and you can make 2009 contributions up until April 15, 2010.
5. Haiti or Chile Charitable Donations
Did you make any cash donations to Haiti or Chile earthquake relief efforts? A new bill allows you to deduct any such donations made by April 15 on your 2009 return (ordinarily you would have to wait until you file your 2010 return).
6. Don’t Miss Out on Itemizing Your Deductions
It’s easier to simply take the standard deduction, but you don’t want to miss out on any savings you have coming. To find out if you’re better of taking the standard deduction or itemizing, add up your:
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Mortgage interest
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Real estate taxes
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State and local tax withheld (listed on your W-2)
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If your state has no income tax, substitute your sales tax deduction (you can find it at www.IRS.gov)
If your total is more than the standard deduction, you’re better of itemizing. For reference, the standard deduction is $11,400 for married couples filing jointly and qualifying widows and widowers, $5,700 for single filers and married individuals filing separately and $8,350 for heads of household.
7. File an Extension if Necessary
Everyone is eligible for an extension, which gives you six more months to file your return (by October 15). However, your request for an extension must be filed by April 15, and though it gives you more time for paperwork, your payment is still due. If you suspect you owe money for your taxes, pay as much of the amount as you can now to keep penalties and interest charges to a minimum.
Either way, make sure you either file your return or file an extension by midnight tonight, April 15 -- even if you can’t afford to pay. The fines you’ll be charged for not filing at all are WORSE than the fines for filing and just paying late.
Need a Laugh? 10 Outrageous Tax Expenditures
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Ever wonder where all your hard-earned tax dollars are going? For starters, they’re helping the U.S. try to communicate with aliens!
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Tax time is usually no laughing matter, which is exactly why you’re probably due for a well-earned dose of laughter. Woman’s Day recently put together a list of outrageous expenditures by Congress … expenses that were paid for by those taxes you’re so dutifully filing.
So for a laugh and a break from the seriousness of tax day … here’s Woman’s Day list of the 10 most outrageous tax expenditures:
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$600 million: Spent to automate census-taking in 2008 (the attempt failed).
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$10.6 million: Total spent researching animal waste over the last five years.
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$3 million: Funding for the Arctic Winter Games (recreation in the North Pole) over the last five years.
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$4.6 million: Spent on funding for the “Alien Array Telescope” that has been trying to communicate with aliens for five years now.
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$2 million: Money used to re-purchase the presidential yacht sold in 1977 by Jimmy Carter.
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$2 million: Used to build The Charles Rangel Library (and other Rangel centers) … Charles Rangel is a congressman who requested funding for the library in 2007.
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$1 million: Total spent funding the Waterfree Urinal Conservation Initiative in 2006.
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$1 million: Used to restore Woody Island, which is uninhabited, in 2005.
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$500,000: Spent to build the Sparta Teapot Museum (located in North Carolina) in 2006.
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$100,000: Amount spent studying World of Warcraft gamers.
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Recommended Reading
How and WHY to File Your Taxes on the Last Day: Six Last-Minute Tax Day Tips
The Most and Least Tax-Friendly Places to Live in the USA
Sources
MSNBC.com March 10, 2010
NYTimes.com February 14, 2010
Kiplinger.com December 2009
WomansDay.com March 30, 2009