Psyched over taxes.Doing your own taxes is as much about psyching yourself up as actually completing your return. Financial adviser L. Patrick Le'Flore of PricewaterhouseCoopers offers the following tips. Have a tax preparation checklist It should include your personal information, income tax information (for example, W-2 forms W-2 Form The form that an employer must send to an employee and the IRS at the end of the year. The W-2 form reports an employee's annual wages and the amount of taxes withheld from his or her paycheck. , investment income statements, etc.), any adjustments (student loans, moving expenses), information on all household employees, any tax write-offs (such as mortgage payments), direct deposit and any foreign-bank account info, and any energy-saving purchases (for example, new kitchen appliances). Consider itemizing your deductions Home ownership, state and local taxes, charitable donations, out-of-pocket medical expenses, and miscellaneous expenses are all deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). . If they are greater than the standard deduction The name given to a fixed amount of money that may be subtracted from the adjusted gross income of a taxpayer who does not itemize certain living expenses for Income Tax purposes. ($7,550 for heads of household for 2006 tax returns, $5,150 for single fliers), you should itemize To individually state each item or article. Frequently used in tax accounting, an itemized account or claim separately lists amounts that add up to the final sum of the total account on claim. . Work the system to your advantage Although there are no federal marriage rights for gay couples, we can actually save more money than our married friends by thinking as a unit and not two single people. For instance, deductions for charitable contributions charitable contribution n. in taxation, a contribution to an organization which is officially created for charitable, religious, educational, scientific, artistic, literary, or other good works. should come on the return of the partner who has the higher tax bracket Tax Bracket The rate at which an individual is taxed due to a particular income level. Notes: Each income class is taxed at a different level. Generally, the more you make the more you are taxed. , as should any assets or interest-earning stocks and bonds. Make your partner a dependent If one half of a cohabiting couple receives at least 50% of his or her total support from the other and made less income than the personal deduction of $3,300, that partner can be listed as a dependent on the other's tax return and claimed as an exemption to get a better tax break. |
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