February
14, 2008
5 tax tips you can't afford to ignore
Easy Ways To Cut
Bottom Line
By Doug Frattallone
T-minus 62 days before April 15 arrives.
Will you get a hefty tax return this year? Or will Uncle Sam get more of your dough?
To help ensure the former, there are at least five no-brainer (and quite legal) actions you can take to make this tax season less taxing. We will also hit you with a few, shall we say, 'unusual deductions' people have gotten away with itemizing. Hopefully none of this information will make your head spin.
- Out-of-pocket charitable contributions add up.
According to TurboTax.com, this is a commonly overlooked deduction. The important thing is to keep a record of everything, if you possibly can. If you drove your car for charity, you get 14 cents per mile. But again, documentation is key. The last thing you want is an auditor questioning you about the laundry list of items you submitted, and you don't have the details.
- Don't forget about education deductions.
Here's a stunning figure: According to H&R Block, an estimated 4.1 million taxpayers fail to claim education-related tax benefits each year. Two deductions you may want to check into include deducting up to $4,000 per student for tuition and fees. Taxpayers can also deduct up to $2,500 per return for interest paid on student loans.
- Take advantage of the energy credit.
Did you put new windows in your house that are energy-efficient? Perhaps a new exterior door that does a better job of keeping the cold out and the heat in? How about a new furnace or central air conditioner? If you did any of these things in 2007, you could be in line for a credit. It might not be a huge chunk of cash, but unlike a deduction, tax credits reduce/increase the bottom line dollar-for-dollar.
- Remember to include your Social Security number on your tax return.
Besides putting the wrong name on your return, it doesn't get any simpler than this. According to the IRS, however, taxpayers consistently botch this elementary 1040 entry. How does that cost you money? Well, anything that delays your return getting to you quicker is more time you're not drawing interest on it (or spending it).
- It's never too late. For at least three years.
Obviously there are infinitely more deductions and/or credits one might take advantage of in the myriad of IRS rules and regulations. The bad news is that you can't always think of everything. The good news is that the window to take advantage of everything doesn't slam shut the second you mail in your return. The IRS allows you to reclaim your lost cash by filing amended returns. The catch: you can file an amended return only for up to the past three years.
As for thinking about everything, some filers get pretty creative when it comes to tax time. But don't think the IRS always says "no." To close things out, here are five of some of the weirdest tax write-offs that have passed IRS muster over the years:
Breast Implants
Exotic dancer Cynthia Hess (stage name "Chesty Love") once wrote off a $2,000 breast augmentation bill that increased her chest size to 56FF. She was allowed to take the deduction because her breasts were ultimately considered a "stage prop."
Body Oil
A similar story is told in the world of professional bodybuilding. A competitor was allowed to deduct "ProTan Muscle Juice Professional Posing Oil" as a business expense, which he applied to his body prior to going onstage. The oil was part of the show, and the IRS didn't flinch.
Ostrich Farming
One year, a Louisiana livestock producer depreciated his ostrich. The IRS didn't stick its head in the sand on this one. The government allows you to depreciate the costs of any livestock as long as it is used for breeding.
Cat Food
A scrap yard owner wanted to attract wild cats in order to keep snakes and rats out of his property. So he spent $300 on cat food to lure the felines. The IRS saw it as a legitimate business expense.
Swimming Pool
An elderly man was able to claim the cost of a swimming pool. How? He was diagnosed with emphysema and he told the IRS that he was under doctor's orders to get more exercise. The pool allowed him to do just that.
RELATED INFORMATION
Reproduced by the Goffstown
Residents Association.
|
