TAX TIME: April 15 on its way
Just as snows will come in January, so will those thick booklets from the IRS sending greetings that another tax season is nigh.
Along with champagne corks popping and New Year’s dinners with cabbage and black-eyed peas is the time to end the old year and start the new decade with a review of what will make paying taxes by April 15 an easier experience and possibly a money-saving one as well.
Pre-tax planning can mean considering many aspects of one’s financial condition, according to Jay Zornes, co-owner of Creative Financial Solutions Inc.
“Some pretax planning would be helpful as far as finding if you have maxed out your 401K options,” Zornes said. “A lot of times pretax planning before the end of the year will help determine if they can make an additional IRA contribution.”
Eligible taxpayers are allowed to deduct a portion of an IRA contribution for the year and have until April 15 to make a contribution.
“A lot of people like to know before the end of the year, before they file their taxes, as a way of preplanning,” Zornes said.
It can be beneficial for taxpayers to do an audit of their checkbook looking out for all deductible medical expenses and contributions to charities that can be tax deductible.
“You can’t keep enough when it comes to receipts,” he said. “If you think it is deductible, keep (the receipt) and let your tax consultant decide.”
There are also tax deductions for sales tax on vehicle purchases for cars, light trucks, motor homes or motorcycles. The buyer may be able to deduct sales tax up to $49,500, according to Zornes.
There has also been an extension of the first-time homebuyer credit to June of 2010.
“The credit is $8,000 and is available as long as you have a binding contract signed by April 2010,” according to Zornes.
Higher education expenses are also possible tax deductions.
“You may claim up to $2,500 for college expenses. Credit is 100 percent of expenses up to $2,000, plus 25 per cent of the next $2,000 expenses,” according to Zornes. “This credit applies to all four years of college, not just the first two.”
Also charitable contributions can be made until Dec. 31.
“This might be a good time to clean out some closets and give the items to charitable organizations,” Zornes states. “So if you are thinking about doing some cleaning, buying a car or a new home, get out there and get it done.”