1040 Tax Information
Note: This is
not an IRS site, but a collection of ways to save money at
tax time - ways that you may not have heard of.
IRA Tax Deduction Secret
Starting an IRA (Individual retirement account)? There is
a way to get two tax deductions from your contribution.
Instead of using cash, sell any stock you own which has decreased
in value, and then put THAT cash in your IRA. Why? Because you
can write off the capital loss for the sale of the stock, and
thereby reduce your taxes even more than if you just put savings
into the IRA.
What if you still like the stock? Buy it back using your IRA.
There is a "wash rule" in the tax code that says you
can't sell and repurchase a stock (within a certain amount of
time) just to claim a loss. However, you and your IRA are separate
entities as far as this rule is concerned, so you can immediately
repurchase the stock in your IRA and still write off the loss.
The Telephone Excise Tax Refund (TETR)
This is a one-time payment available on your 2006 federal
income tax return. It is designed to refund previously collected
long distance telephone taxes. Individuals, businesses and tax-exempt
organizations are eligible to request it.
Taxpayers have a choice: a standard refund amount between
$30 and $60, based on the total number of exemptions claimed
on their 2006 tax return, to eliminate the need to locate old
phone bills; or they can locate those bills and use the actual
amount. Ask your tax preparer about this one.
File Your Taxes Electronically For Free
Free File is a relatively new IRS program is a free
service offered by companies for taxpayers with an Adjusted Gross
Income (AGI) of $52,000 or less. You can find the links to these
companies at the IRS web site.
Before selecting a company link, review the tax software company’s
criteria to confirm that you meet their eligibility for preparing
and e-filing your federal return for free.
Fees for state tax returns may apply. Some companies offer
free state tax return preparation and e-filing.
Some companies offer free e-filing of the Form 1040EZ-T, Telephone
Excise Tax Refund, for those who want to claim the refund credit
and are not required to file a federal income tax return.
You are under no obligation to buy any of the company’s
other products or services.
General Tax Savings Tips
1. Take every deduction you can. Audits are rare, and if you
honestly think you are entitled to a deduction, taking it is
not a crime. If you are not entitled, at most you'll have to
pay a penalty and interest - but only if you are audited.
2. Put off income or capital gains. We once delayed a closing
on a property we sold by a week, in order to close after the
new year. Our profit wasn't taxed for an extra year that way.
3. Accelerate your deductible expenses. If you pay the property
taxes on that rental unit this year, you get to claim it as an
expense this year, and so pay less tax.
4. Get good advice. If you have a high income, or a business,
stock market or real estate investments, you need to talk to
a good tax accountant (not just a tax preparer).
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