Your taxes from A to Z
Doing your taxes is not as easy as ABC, but these
alphabetical tips could make the process less difficult and save you some money,
too. Check out these tax opportunities to take or pitfalls to avoid.
W Withholding -- When you collect the bulk of your income via a regular check from your employer, the amount of tax due the IRS is collected by withholding of payroll taxes. This chunk of money that is taken out each pay period by your employer includes federal and state income taxes, as well as payments to the Social Security and Medicare systems. You get the details of how much was withheld each year on your W-2 statement. But you also have a responsibility to ensure that the correct amount is withheld from your checks. Too much withholding means Uncle Sam gets free use of your money all year; too little, and you'll owe at filing time. So periodically check your withholding amount and adjust it if necessary.
Beginning this April, withholding amounts will be less for many taxpayers, thanks to the Making Work Pay credit. The credit is part of the 2009 economic stimulus measure that became law on Feb. 17, and will also apply to 2010 payroll withholding calculations.
copies -- Did you make hundreds of Xerox copies of your resume as you searched
for a new job? Uncle Sam might be able to help you defray that copying cost. In
order to claim any job-hunting expenses, you must look for a position within your current field. You can't
ask the IRS to help you go from software programmer to songwriter, although a
good deal of creativity is required for both. Your career change costs also will
have to be pretty substantial; they are included as part of miscellaneous
deductions, meaning all these expenses must total more than 2 percent of your
adjusted gross income before you can claim them. To help you reach that threshold,
you also can count employment agency fees, want-ad placement costs and even out-of-town
job-hunting trips. Just be sure to save your receipts.
-- Children can add
a lot to your life, and at
tax time you can actually
put a dollar sign on your
youngsters' value. There are
joys of parenthood, from the child tax credit to write-offs for some care costs to help paying for school, from kindergarten through college. Plus, every son or daughter is an added exemption on your tax return. But if you have a really large family, you might end up owing the alternative minimum tax. This parallel tax system was
created to make sure wealthy
taxpayers paid their fair
share. Now, however, because
the AMT does not take inflation
into account, it is snaring
more middle-income taxpayers,
some of them because they
legitimately claim a large
number of personal deductions
finally, we have reached the end of our tax alphabet with:
-- If you didn't take all
the legitimate tax breaks that you're eligible for,
this could be the amount you have left after paying
your taxes. But here's hoping that these alphabetical
tips mean that zilch is the amount that the IRS will
get from you this tax-filing season.
|-- Updated: Feb. 27, 2009