taxes

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" -- This, of course, is the nickname for President George W. Bush, who has made revamping the U.S. tax code a key goal of his administration. During his tenure, W and Congress have tweaked existing laws: lowering tax rates, increasing some credits, easing the marriage penalty, lessening the tax bite on some investments and even reinstating the state sales tax deduction, a welcome break for residents of states with no income taxes to write off. But the major changes the president sought -- the complete overhaul of the U.S. tax code -- never came to fruition. W's own Presidential Advisory Panel on Federal Tax Reform presented recommendations in November 2005 on ways to restructure the tax code, but the panel's more controversial changes, such as eliminating the deductions for mortgage interest and property taxes, were met with political and public resistance and were tabled.

Xerox 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.

Youngsters -- 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 many tax 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, since 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 for children.

And finally, we have reached the end of our tax alphabet with:

Zilch -- 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.

advertisement

Show Bankrate's community sharing policy
          Connect with us
MORTGAGE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed 4.17%  0.07 4.24%
15 year fixed 3.26%  0.04 3.30%
5/1 ARM 3.33%  0.09 3.42%
 
View Rates in your area Next
Product Rate Change Last week
30K FICO-based HELOC 4.29% --0.00 4.29%
50K FICO-based HELOC 4.04% --0.00 4.04%
100K FICO-based HELOC 3.89% --0.00 3.89%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.79% --0.00 2.79%
48 month used car loan 2.99%  0.01 2.98%
60 month new car loan 3.24% --0.00 3.24%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 0.97%  0.02 0.95%
2 Year CD 1.16%  0.01 1.15%
5 Year CD 1.71%  0.04 1.75%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.75%  0.02 15.77%
Cash Back Cards 16.45%  0.03 16.48%
Low Interest Cards 10.96% --0.00 10.96%
 
Next
advertisement
DAILY TAX TIP NEWSLETTER

Get expert advice during tax season on tax preparation and tips for cutting your tax bill.

advertisement

Connect with us