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PROPERTY & INCOME TAXES -
Reducing Your Property Taxes With A Lower Appraisal (continued)
caveat should be understood. In some tax districts, the law allows a Board of Review to not only decrease your appraised value, but also increase the appraised value, if you submit a formal challenge. Check to see if this is allowed in your tax district, and proceed accordingly if you feel there is any risk that the facts presented by the appraiser’s office could support an increase in value.
When it comes to income taxes (both Federal and state) there are literally hundreds, if not thousands, of ways to legitimately reduce your tax burden. However, for the average tax payer, the number is much smaller. Below are some of the more useful ways you can minimize your tax payments and other costs,while still paying your fair share. Most all of the information required to see if these potential tax savings apply to you is included in the instructions to Form 1040 and associated state tax forms.
1. If you are married, and both spouses have income, check to see if filing as single tax payers will save you money versus filing jointly. Many times it won’t, but sometimes it does. Also, see if you qualify to file as a head of household, which might also reduce your taxes.
2. Make sure you claim all of your dependents. Remember, relatives and other individuals can be classified as dependents for tax purposes if your relationship with them (and financial support) meets certain requirements. So read the instructions, you may receive more exemptions.
3. Check to see if you are eligible to receive the child tax credit.
4. If you have tax-
5. If you have your own business, make sure you include all expenses and depreciation you are entitled to in accordance with Schedule C instructions. If any item, such as newspaper subscriptions or Internet subscription fees or anything else, is used partially or totally for your business, you may be entitled to a deduction.
6. Make sure capital gain income is classified properly. If it is long-
7. Before listing pension and annuity income, IRA distributions and Social Security benefits as income, see if all or a portion is exempt from taxation.
8. At the bottom of Form 1040 there are several potential deductions to adjusted gross income. Make sure you review each of these carefully to see if you get one or more deductions. And even if you do not presently qualify for a specific deduction, see if taking certain actions, like setting up an IRA or health savings account, etc. will provide additional deductions in the coming years.
9. On the back of Form 1040 make sure you and/or your spouse get credit for being over 65 and/or blind. Also review all the other potential credits to see if you qualify, including credits for child care.
10. Make sure you look at Schedule B to see if itemizing deductions, versus taking the standard deduction, will save you money. Just do not assume that the standard deduction is best. Itemized deductions can really add up.
a. When figuring if you can receive a deduction for medical expenses, read the instructions carefully to make sure you include all eligible expenses. There are many types of expenses that are eligible.
b. When deducting state and local income taxes, and real estate and personal property taxes, make sure you read carefully all the types of taxes that can be included. There are many smaller taxes you pay throughout the year that may be deductible. If you bought or sold a house during the year, see if the settlement statement includes any real estate or other taxes you paid that might be deductible.
c. When figuring interest paid deductions, if you bought or sold a house in the tax year, make sure you determine if any interest costs included in the settlement (such as points) are tax deductible. Also, if you paid off a mortgage during the year, and the original mortgage had points that were not previously fully deducted, you may be able to deduct these points. If you paid mortgage insurance premiums (PMI) on a mortgage taken out in 2007 or later, you may be able to deduct the premium as mortgage interest. And consider paying your mortgage payment due on January 1, in December, so it can be deducted in the current year, if desirable.
d. Make sure you get receipts for all donations made, including church donations (consider tithing with a check). The rules for donations have become more strict.
e. Make sure to see if any casualty or theft losses you experienced during the year are deductible.
f. Tax preparation fees, job expenses and other types of expenses are also deductible after certain limits are satisfied. See if you are eligible.
11. Make sure you also list all tax payments you have made throughout the year.
These tax payments will be shown on your W-
12. Don’t hesitate to have your refund deposited directly into your checking or savings account by filling in the required information. This is a quicker way to get your refund and is perfectly safe.
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