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"What can I do now to lower my taxes?"
The following is a list of who can benefit from the 2009 Stimulus Package.
College Students and Their Families
New Car Buyers
Retirees, Veterans and Disabled
You can find more details regarding how these tax breaks might affect you by going to the Turbo Tax website and click on the Tax Calculators and Tips tab. There you will find the Featured Tax Guide that outlines the specifics.
If you are a small business owner I suggest you go to the the following link from the Turbo Tax website to view an extensive list of the Top Tax Incentives for Small Business Owners. http://www.2009stimulusforbusiness.com/?tab2.
There are a number of end of year tax savings tips you can utilize. One year end tax planning strategies you may want to consider is what is known as end of year tax- loss harvesting for your Non-IRA investment holdings. If you have an investment holding ie. stock or mutual fund that is worth less than what you paid for it, you can sell the position, recognize a loss then either buy into something else( I suggest very similar in nature to stay as close to original holding as possible ) or wait 31 days to buy back into the same position. This will allow you to offset any current gains dollar for dollar up to the amount of your realized loss and carry forward up to $3,000 of additional loss(if any remaining) for future years. You
may also bee able to defer a year-end bonus, or delay the collection of business debts, rents, and payments for services. Similarly, you may be able to accelerate deductions into 2009 by paying some deductible expenses such as medical expenses, interest, and state and local taxes before year end.
James Claiborne, C.F.S, ChFC Prism Financial Group, Overland Park KS
There are a number of purchases you can make in 2009 that will give you significant deductions. If you buy your first home by December 1 you can deduct 10% of the purchase price, up to $8,000, if your adjusted gross income is less than $75,000 ($150,000 married). Note: you have to keep the house 3 years. (There is a chance this will be extended.)
If you buy a new car (not used) you can deduct sales and excise taxes for a car or truck up to $49,500, even if you don’t itemize your taxes. Deduction phases out if your adjusted gross income is more than $125,000 ($250,000 married.)
If you’re putting your child through college you claim $2,500 in 2009 and 2010 for college costs. Adjusted gross income up to $80,000 ($160,000 married.) You need to spend at least $4000 each year to get full credit. Includes books, not just tuition.
Also, if you are over 70 you can move as much as $100, 000 directly from an IRA to a qualified charity without it being considered as taxable income. For more info see IRS publication 590 at www.irs.gov.
Now is the time to go green! Certain products that are installed in 2009 will earn you a considerable tax credit. By installing new storm windows we are able to deduct $1500 against next years taxes. We also plan to install new insulation. You can get tax credits at 30% of the cost up to $1500 for some energy efficient windows and doors, insulation, water heaters, metal and asphalt roofs, and heating/cooling systems. The deal is good for 2009 and 2010 if you are remodeling a home (not building a new). Plus you can get the 30% credit with NO upper limit for both existing and new home construction when you buy solar panels, solar water heaters and other energy-efficient items. My brother lives in the south and buillt a house this year with solar panels and a solar water heater and expects to get a lot back. The site I use for tax credits and rebate offers is energystar.gov. Also, depending on where you live you can get rebates for buying energy-saving products. Here in New Jersey there are deals for buying air conditioners, refrigerators, freezers and clothes washers.
I know it hurts to get a big tax bill, and it’s not fun to find out that you owe the government nearly five thousand bucks. But there are some ways you can start to lower your taxes in the future. Here are six strategies I’d recommend:
Adjust Your Withholdings At Work
Since you said that you owed money last year also, and that your wife was recently laid off for two months, it very well could be the case that your W-4 withholdings need to be tweaked at work – possibly at both of your places of employment. In essence, you need to adjust your withholdings so that more taxes are taken out over the course of the year. Even though this is still paying taxes, it’s spread out. So you’re less likely to feel the sting of it. Also, by prepaying the proper amount of taxes due over the year, you’ll avoid those nasty IRS penalties for under-payments. Publication 919 from the IRS has more details about properly adjusting your withholdings to that you don’t wind up paying too much tax. You can go to check your credit score here http://www.clearcreekfinancial.com
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With the end of the year approaching I’d like to learn about anything I can do now to lower my taxes. Are there stimulus offers I can take advantage of now before they expire?