Tax Tips

 

  • College Time:  Just because your child leaves home to go off to college doesn't mean you can't claim them as a dependent any more. Actually, in most cases you could be eligible for a refundable tuition credit.  As long as your child still qualifies as your dependent you may continue to claim them.  The American Opportunity Credit has been made a permanent credit.
  • Save For Your Retirement:  Putting money into an IRA before the end of the year can reduce your taxable income, and if you qualify, there is also a retirement savings contribution credit using Form 8880.
  • Under 59 1/2 And Need Money?  If you make a withdrawal from your IRA before the age of 59 1/2 there are exceptions to the 10% penalty that could save you a lot of money.  If you take the money out to pay for certain higher education expenses, for a first-time home purchase or to pay for health insurance, if you have been unemployed for at least 12 weeks you may be eligible to exclude the 10% penalty.
  • Teachers Get A Break:  Grade K - 12 teachers who purchase books and supplies that are used in their classrooms can take up to $250 with the Educator Expense credit on their tax return. This credit has been made permanent.
  • Donations:  Charitable contributions of used furniture, appliances or clothing that are made should be documented, photographed and attached to your dated receipt and kept for your records.
  • Paying A Student Loan For Your Child?  If you are making the payments and are legally liable for your child's student loan, you may deduct the interest from that loan as an adjustment to income.
  • Long Term Care Insurance:  Qualified long term care insurance premiums are deductible subject to age and annual dollar limits.
  • Reinvested Dividends:  If stock or mutual fund dividends are automatically reinvested instead of received in cash, these reinvestments increase the cost basis, and reduce gain or increase loss upon sale.