Getting organized for the tax year
taxes to reduce taxes
Homeowners get another way to reduce what
they pay Uncle Sam: using the real estate
taxes they pay as a deduction.
If part of your mortgage payment
each month includes an escrow amount that's
used to pay annual real estate taxes, then
the Form 1098 you get from your lender also
will tell you this amount.
On 2008 taxes (and the 2009
tax year, too), homeowners who don't itemize
their deductions also get a break when it
comes to property taxes. In these cases, taxpayers
who claim the standard deduction can add up
to $500 if they are single, or up to $1,000
if married filing a joint return, to their
standard deduction amount. If you don't have
enough deductions to itemize but do pay property
taxes, be sure to take advantage of this new
-- but so far, temporary -- tax break.
Then there are any state and
local income taxes you paid. Check your W-2
for this information, and be sure to deduct
Don't own a house? Don't despair. There's still a
tax deduction opportunity for you if your state or county charges a personal property
tax. Most often, this tax is on autos, so if you pay, make sure the collecting
tax agency sends you a statement showing how much so you can put it on your Schedule
Work expenses can cut your taxes
Did you look for a new job this year? Kept
your job but had to shell out for work-related
items and never got paid back? Move to take
a new job?
All of these situations can
help reduce your tax bill, as long as you've
got the documentation. In the case of job
searches, find those receipts for anything
related to your hunt -- though you must be
looking for work in the same field.
If you kept your current job
but had to pay for some items that your boss
didn't reimburse you for -- travel expenses,
uniforms, union dues, subscriptions -- then
these can be deducted as miscellaneous items
on Schedule A. Again, you'll need the receipts,
so go through your paperwork collection carefully.
deeds, good records, good tax break
Good deeds can be their own reward. They also
you at tax time.
Cash donations to qualified
charities can be deducted, and you should
get a note from the charity acknowledging
your gift if it was $250 or more. In addition,
you won't necessarily need a formal receipt,
but you will need some sort of documentation,
such as a canceled check or bank or credit
card statement, for your monetary gifts of
You'll also need that receipt
you got when you dropped clothes and books
off at the local Goodwill collection center
to claim a deduction. And thanks to a new
law, you also better make sure that the articles
were in good shape. The IRS can deny deductions
for anything that it deems of "minimal
monetary value." So no giving away threadbare
sweaters that really should go in the trash
and then writing the gift off.
You can get credit if you volunteered
at the local soup kitchen. No, you can't deduct
the value of your time, but if you drove there,
you can deduct 14 cents per mile as a charitable
gift. Documentation of your effort can be
as easy as a notation on your calendar of
the days you worked and where the shelter
Accurate taxes require
Now that you know what data you'll need to
file your taxes, you've taken a big first
step in the process.
By knowing what information
you need, digging out those documents and
keeping track of all the tax-related account
statements you've received, you'll immediately
realize if you're missing anything or if something
needs to be corrected.
either case, you still have plenty of time to track down the proper documentation
-- saving you time, anxiety and possibly money when you file your return.