Lighten Your Tax Burden

by in Tax Issues

Imagine if Goldilocks had to file taxes — forking out a hefty amount in April one year, then getting a huge refund the next. For many adults, finding a withholding amount that's “just right” seems nearly impossible.
But, if you owed taxes in a prior year or received a refund that was a great deal larger than expected, it may be a good idea to adjust your withholding. The bottom line is to pay the lowest amount of taxes possible.

As the year begins, this is a good time to talk to a licensed tax specialist about adjusting withholding, and re-computing your estimated tax requirements, as well as other possibilities for easing your tax burden for this coming season.

Read some tips for tax savings from America's tax experts, the National Association of Enrolled Agents — a group of licensed tax practitioners who focus solely on taxation year-round.

* Now that we know we still have special rates for capital gains, this is a good time to harvest some of your long-term gains. You may find yourself paying as little as 0% or 15% if your adjusted gross income is less than $450,000 (married filing jointly) or $400,000 (single). Do this before your business income skyrockets and raises your tax levels.

* Giving to charity can help reduce your tax bill if you are able to itemize deductions. In addition to contributions made by cash, check or credit card, the crisp fall air may provide the energy to clean house looking for items in good condition that can be donated to a qualified charitable organization. Remember to make a list of the items and determine their fair market value. Clip the list to the receipt from the organization and keep it with your tax documents for your records.

* Sometimes, a major life change is thrown your way, and you might not think of it as a tax deduction. If you found yourself looking for a new job, then agency fees, resume expenses, career counseling costs and travel related to the job search may be deductible even if the job search was unsuccessful.

* The new tax law increases the tax burden on ‘rich” couples. You may want to re-think that upcoming wedding if your combined incomes will exceed $400,000. The way a variety of provisions in the law is written, single folks can earn up to about $400,000 without extra tax burdens. But when two singles earning $250,000 each get married, they get hit with a variety of tax penalties, limitations and tax increases. Sad to say…if you are married and your earnings are hitting these thresholds, you may want to consider a divorce for tax purposes.

Get more tips and find an enrolled agent at www.naea.org or a CPA at www.cpadirectory.com/

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About the Author - Eva Rosenberg

Eva Rosenberg, EA, founder of the popular tax advice site, TaxMama.com, is a nationally syndicated Dow Jones columnist at MarketWatch.com, an author and popular speaker and instructor. Please join the TaxMama family and get answers to your own tax questions.

 

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