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Act Now · Tax Tips · Free · 13 Deadly Sins · ? & Comments · Tax Resources
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On May 17, 2006, President Bush signed a $70 billion tax-cut package. It features:
- A two-year extension of the reduced 15 percent tax rate for capital gains and dividends, which were set to expire at the close of 2008.
- A one year extension of recent changes to the alternative minimum tax to prevent it from hitting more upper middle-income families.
- The maximum 401(k) and 403(b) employee contribution increases to $15,000.
- Tax credit up to $3,400 for new hybrid vehicles.
- Increased Section 179 expense deduction maximum from $105,000 to $108,000 in 2006.
- Gift tax annual exclusion increased from $11,000 to $12,000.
- New tax credit for residential energy-efficient property until 2008. Taxpayers may claim a credit for 30% of the cost of installing solar water-heating, photovoltaic, or fuel-cell equipment in his or her residence, up to $2,000 total.
- New tax credit for non-business energy property until 2008. Taxpayers may claim a lifetime credit of up to $500; 10% of the cost of qualifying materials.
- Beginning in 2008, taxpayers in the 10% and 15% tax brackets will be able to sell assets, such as stocks or mutual funds, without paying any capital gains taxes. It lasts through 2010.
- “Kiddie tax” is raised to 18 (Kiddie tax loophole closed by Congress in June 2007).
On June 7, 2001, the $1.35 trillion across-the-board tax cut pledge to cut taxes is enacted, effective over 10 years.
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Your state may offer taxpayers who previously owed taxes but have not yet been caught the chance to come forward and pay the taxes they owe, minus half the accumulated interest and with no penalties. These amnesties are prompted by the economic slowdown.
Ohio, Arizona, Louisiana, Maryland, Michigan, Nevada and New Hampshire all proposed or held such amnesties, estimating they can raise at least $224 million. Since 1982 at least 39 states and the District of Columbia have periodically enacted this type of tax amnesty.
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On January 1, 2002 the US government officially increased the amount of money you can contribute to your 401(k)s, 403(b)s, 457s and other retirement accounts, tax-deferred of course, by $500 – IRAs can contain $1,000 more this year.
And for those over 50 years old, “catch-up” provisions let you contribute even more – an additional $1,000 to 401(k) type plans and an additional $500 to IRAs this year. It gets better, coming years will see increases in the amount you can contribute.
Finally, you are likely entitled to addition tax credits on the amount you contribute to your retirement savings plans, in addition to other deductions. Take action – max-out your retirement contributions (but don’t put most of it into your company’s stock!) and take every deduction.
Act Now · Tax Tips · Free · 13 Deadly Sins · ? & Comments · Tax Resources
Oops! About $95 million in tax cut checks were sent to the wrong addresses.
Oops #2! Around 523,000 out of the estimated 112 million tax cut check refund notices sent by the IRS mistakenly informed taxpayers that they will get the maximum possible refund check. A computer program that initially failed to take into account certain tax credits was blamed as the source of the mistake.
Prepare for next tax season
Learn 15 ways to make work simple
Think about all you had to go through the last time you filed and resolve to ease the burden now. Yes, taxes can get easier!
Here are 13 tips to help you defang your tax bite:
- Start saving the appropriate records and receipts now. Don't wait until the last minute and be forced to frantically rummage through a year's worth of unsorted records and receipts (that is, if you can find them!). Rushing produces errors and stress. So eliminate the need. Act now!
- Store records, information and money in a manner you can use and find when necessary
- Consult a tax specialist (even programs and books) and the IRS (800.424.1040, 800.829.4477, 800.TAX.FORM and 800.829.0433 for suspected tax fraud) for advice
- Evaluate all your options:
- do-it-yourself
- computer programs (TurboTax/Quicken/MacInTax, TaxCut/Money, etc.)
- your tax preparer, accountant, CPA or tax attorney
- electronic filing (www.hdvest.com, www.turbotax.com, www.taxcut.com, etc.)
- payment options- check, money order, credit card/888.2PAY.TAX (American Express, Discover, MasterCard), installments, etc.
- will you file single or joint, self-employed, independent contractor, non profit or not-for-profit work, home office, etc.?
- Claim what's due. Don't be afraid to ask for a refund, deductions and credits
- tax preparation costs
- donations, children, business, education, investments, real estate, etc.
- legal, medical & insurance expenses
- losses- natural disasters, auto accidents, theft, vandalism, embezzlement, etc.)
- some travel, membership & license costs
- job hunting expenses
- weight loss (medical-related)
- etc.
- Consider making a "back up" copy of important records and receipts (copy machine, computer scanner, computer disks, written, etc.)
- If you lose or misplace any records or receipts ask the issuing party(ies) for a duplicate if possible
- Keep things in a designated place. You can't use it if you can't find it
- Get the facts. Everyone should know something about the tax code and any changes to it, especially do-it-yourself filers. Remember, it's your neck is on the line, no matter who prepares your taxes
- Use previous returns to help you. WARNING: Incorporate any new changes
- Set aside money to pay your taxes. And don't spend your refund before you get it!
- Select the most suitable method for you. EX: If you aren't comfortable doing it yourself or don't have the time then find a skilled preparer you can trust now
- Remember to start now and put things in an easy-to-use format that you can find, understand and use
April 15, 2008 was this year's deadline.
Attention: Quarterly filers and filers who got an extension, look out for your next filing deadline (federal, state, local).
Make it as easy as possible. Start preparing now. Don’t put it off. Give yourself plenty of time. If you run into problems consult a tax expert. Want more on taxes?
April 23, 2008 is Tax Freedom Day. This is how many days Americans must work to pay their taxes each year as calculated by The Tax Foundation. Prior Tax Freedom Days: April 30, 2007, April 26, 2006, April 17, 2005 and April 11, 2004.