April 18th is just around the corner and if you are like my husband and me, you may have been putting off the inevitable. But just because you have to file a return does not mean that you will necessarily need to pay Uncle Sam big money. There are several tax tips to make sure that you are doing everything possible to lower your tax bill.
Tax Tips #1: Deductions
Take a second look at your tax return. You may just be able to deduct more from your taxes than you realized to start with. Remember that you can deduct items like uniforms you bought for a job and mileage that you used for any business endeavors. Even the space in your home that you designated solely for a business use can lead to a big deduction. For example, I was able to deduct the office space I use for blogging and my new laptop as a business expense since I only use that space and my laptop for blogging.
Tax Tips #2: Remember Your Losses
No one likes to admit defeat but at tax time, your losses can save you some serious money. Be sure to claim any losses that you took during the year on your investment portfolio including all stock and mutual fund investments. Remember to also write off any real estate losses or losses from theft.
Tax Tips #3: Use Your Tax Credits
There are a bunch of tax credits that you may not realize that you are eligible for. For example, someone that bought their first home between January 1, 2009 and April 30, 2010 for less than $800,000 may qualify for a tax credit worth 10% of the new home’s value up to $8,000 if they will live in the new house for more than 3 years.
Also, repeat home buyers who bought a new home valued at less than $800,000 between November 6, 2009 and April 30, 2010 after living in their previous house for at least 5 consecutive years may qualify for a tax credit worth 10% of their new home’s value up to $6,500.
Tax Tips #4: You Can Still Contribute to your 2010 IRA
Even though we are well into 2011, it’s still not too late to make a contribution to your IRA for 2010. You have until April 18th to max out you’re your contributions for 2010. Why should you miss out on a potential tax deduction that can help you trim your tax bill? Take advantage of the tax savings and save for your future at the same time.
Mr. BFS and I are taking advantage of this extra 4 months to fully fund a second Roth IRA for 2010, but since that involves post-tax contributions, we won’t be seeing in tax benefits right now. I still love that extra 4 months though…
I hope this little reminder helps. Mr. BFS actually did our taxes last weekend and we personally did save a ton by following our own advice. The hardest part was choosing between the Tuition and Fees Deduction and the Lifetime Learning Credit to see which one would benefit us the most thanks to his graduate school expenses last year. It was a nice problem to have and led to a $200 refund despite my blogging income. Yay!
What great tips have I missed? What deductions and credits would you suggest paying the most attention too?