| Taxes 2007: Good planning can reduce tax bill |
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Embrace energy and tax savings
During the last few years, rising
fuel prices have resulted in
tax enticements from Uncle Sam
that are designed to encourage
Americans to save on energy,
too.
Are you considering
making some home improvements?
If you choose energy-efficient
upgrades that are approved by
the IRS, you can pay for some
of the home work with the tax
credit you'll get.
These credits, which range from large-scale solar power projects to things as simple as replacing windows or adding insulation, began in January 2006. But you don't have to rush at the end of the year to get the tax break. The credits are available in 2007, too. So look into the tax-break requirements and potential reward before you start any remodeling.
Take the same
sort of energy-conscious approach
if you're thinking of buying
a new set of wheels.
Drivers who choose
energy-saving hybrid vehicles
can now get a credit on their
tax return. The exact amount
depends on what kind of IRS-approved
auto you buy and when you purchase
it. So before you head to the
dealership, be sure you have
the latest data, such as this
Bankrate.com
story, to ensure you get the
vehicle you want and the maximum
available tax credit.
Examine your investments
It's always a good idea to periodically evaluate your investment portfolio. It's especially important when it comes to your taxes.
If you sold any
holdings during the year and
made a profit, you'll owe taxes
on that money. You can reduce
or possibly eliminate that tax
bill by selling corresponding
assets on which you'll take
a loss by Dec. 31.
In the coming
year, as you look to rebalance
your investments, make sure
you choose assets that pay qualified
dividends. Thanks to tax-law
changes several years ago, and
just extended through 2010,
certain dividend payments will
cost you less in taxes. They
are taxed at the same rate as
long-term capital gains, which
for most investors is 15 percent,
compared to the ordinary income
rates which go as high as 35
percent.
Less income means less tax
The year might be winding down, but there is still time to trim your eventual 2006 tax bill by reducing your taxable income.
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