smart spending

5 big bills you can cut fast

4. Taxes 
If you're like most people, you probably don't pay much attention to taxes until April 15 rolls around. But taxes affect us daily, whether we're working, shopping or saving for important milestones like retirement.

As it turns out, fall is the perfect time to trim taxes. This year, 15 states have already or soon will sponsor reprieves from sales taxes as part of back-to-school shopping. These tax holidays vary, but typically are scheduled anytime from just before the school year to about mid-October, says Craig Shearman, vice president of government affairs at National Retail Federation. 

"That could mean the difference between buying new back-to-school clothes or making do with last year's wardrobe for some families," says Shearman.

Other ways to reduce your taxes include:

  • Snag the first-time homebuyer credit. Individuals who buy a dwelling from April 9, 2008, to July 1, 2009, and who haven't had owned a primary residence for the previous three years can claim a new credit that's worth 10 percent of a dwelling's purchase price, or up to $7,500. The break phases out for joint tax filers with incomes of $150,000 (or $75,000 for individuals). It's important to note that these credits are structured more like interest-free loans than true tax breaks.
  • Claim the 2008 homeowner's tax break. Individuals who own their home outright or who've had a mortgage so long they're mostly paying principal rather than interest may no longer qualify to itemize on their returns. Now there's some temporary relief for them. This year, they can take $500 (or $1,000 for joint filers) of state and local property taxes as an addition to their standard deduction on their 2008 federal income tax return.
  • Grab breaks for low-income earners. One out of four eligible taxpayers fails to claim the earned-income tax credit, or EITC, worth as much as $4,716 a year depending on someone's earnings, marriage status and whether they have children or other dependents. If you qualified for but didn't claim the EITC, file an amended tax return for any previous year back to 2005.

For more tips on trimming your tax bill, read the Bankrate feature "10 often overlooked tax breaks."

5. Car insurance 
Americans typically spend $820.91 to insure one vehicle per year, but in many parts of the country, premiums can reach "thousands of dollars," according to the latest study by National Association of Insurance Commissioners. Yet there's still much you can do to lower rates.
  • Boost your deductible. That's the amount you pay out of pocket before insurance kicks in. Raise yours from $250 to $500, and you'll shave money from your insurance premium because you're essentially agreeing to take on more financial burden in the event of a mishap.
  • Trim insurance for that old clunker. If your wheels are worth little, consider getting rid of collision coverage, which pays for repairs.
  • Snag low-mileage discounts. Have you cut back on your driving to save gas? Let your insurer know. If you don't drive much, usually no more than 7,500 miles a year, you can get rates lowered.
  • Bundle your policies. Buy more than one policy from the same insurer and you may well get a break of 5 percent to 15 percent, according to Insurance Information Institute. So try keeping your auto, homeowners and other insurance policies with one company.
  • Make age-appropriate auto decisions. A driver's age may impact insurance rates. So, restrict your teen to driving the family's oldest car. Then, let the insurance company know your son or daughter has no access to more valuable cars you own. Older drivers may also pay higher rates. Seniors ages 55 to 70 may qualify for price breaks if they take a safe-driving course, such as the 55Alive program that's run by the Automobile Association of America and the National Institute of Highway Safety.

For more on lowering your car insurance costs, check out the Bankrate feature "6 steps to better, cheaper car insurance."


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