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- kaelyiesta, on 11/03/2009, -0/+17When a person must spend this much time fighting for his money rather than earning it, the incentives for making money become increasingly unproductive. Entire careers build up around understanding the ever changing mountain of tax laws passed each year. The naive would say 'but that is creating more jobs', but unfortunately it isn't; It's redirecting labor from where it would have otherwise been put to use in a more productive fashion.
Not quite on topic I know, but I just got done reading how much corporate influence factors into our tax code and adds obfuscated exemptions to this growing monstrosity. I needed to vent. http://www.google.com/search?q=us+tax+code+number+ ... - shwaa, on 11/03/2009, -0/+15A slide show for tax deductions? Seriously?
I would post the link to the print version, but it's several pages too, so here you go.
1. State Sales Taxes
This write-off makes sense primarily for those who live in states that do not impose an income tax. You must choose between deducting state and local income taxes or state and local sales taxes. For most citizens of income-tax states, the income-tax deduction is a better deal.
If you purchased a vehicle, boat, airplane or home building materials, you get to add the state sales tax you paid to the amount shown in IRS tables for your state, to the extent the sales tax rate you paid doesn't exceed the state's general sales tax rate. The IRS even has a calculator on its Web site to help you figure the deduction, which varies by your state and income level.
2. Reinvested Dividends
If, like most investors you have mutual fund dividends automatically invested in extra shares, remember that each reinvestment increases your "tax basis" in the fund. That, in turn, reduces the taxable capital gain (or increases the tax-saving loss) when you redeem shares.
Forgetting to include the reinvested dividends in your basis -- which you subtract from the proceeds of sale to pinpoint your gain -- means overpaying your tax.
3. Out-of-Pocket Charitable Contributions
You can write off out-of-pocket costs incurred while doing good works. Ingredients for casseroles you prepare for a church or nonprofit organization's soup kitchen, for example, or the cost of stamps you buy for your school's fundraiser count as a charitable contribution.
If you drove your car for charity in 2008, remember to deduct 14 cents per mile (or 35 cents a mile during the first half of the year 41 cents per mile for driving during the last six months done to aid victims of the floods and tornadoes in the Midwest).
4. Student Loan Interest Paid by Mom and Dad
Generally, you can only deduct mortgage or student loan interest if you are legally required to repay the debt. But if the parents pay back a child's student loans, IRS treats it as though the money was given to the child, who then paid the debt.
A child who’s not claimed as a dependent can qualify to deduct up to $2,500 of student loan interest paid by mom and dad. And he or she doesn't have to itemize to use this money-saver.
5. Moving Expense to Take Your First Job
Here’s an interesting dichotomy: Job-hunting expenses incurred while looking for your first job are not deductible; but moving expenses to get to that first job are. And you get this write-off even if you don't itemize.
If you moved more than 50 miles, you can deduct the cost of getting yourself and your household goods to the new area, including 19 cents per mile for moves during the first six months of 2008 and 27 cents per mile for driving your own vehicle after June 30, plus parking fees and tolls.
6. Military reservists travel expenses. Members of the National Guard or military reserve may deserve a deduction for travel expenses to drills or meetings. To qualify, you must travel more than 100 miles from home and be away from home overnight. If you qualify, you can deduct the cost of lodging and half the cost of your meals, plus 50.5 cents per mile for driving your own car during the first six months of the year and 58.5 cents per mile for driving after June 30. In any event, add parking fees or tolls. You get this deduction regardless of whether you itemize.
7. Child-care credit. A credit is so much better than a deduction: It reduces your tax bill dollar for dollar. So missing one is even more painful than missing a deduction that simply reduces the amount of income that's subject to tax.
It's easy to overlook the child-care credit if you pay your child-care bills through a reimbursement account at work. While only $5,000 of such expenses can be paid through a tax-favored reimbursement account, up to $6,000 (for the care of two or more children) can qualify for the credit. So, if you run the maximum through a plan at work, but spend even more for work-related child care, you can claim the credit on an extra $1,000. That would cut your tax bill by at least $200.
8. Estate tax on income in respect of a decedent. This sounds complicated, but it can save you a lot of money if you inherited an IRA from someone whose estate was subject to the federal estate tax.
Basically, you get an income-tax deduction for the amount of estate tax paid on the IRA balance. Let's say you inherited a $100,000 IRA, and the fact that the money was included in your benefactor's estate added $45,000 to the estate tax bill. You get to deduct that $45,000 on your tax returns as you withdraw the money from the IRA. If you withdraw $50,000 in one year, for example, you get to claim a $22,500 itemized deduction on Schedule A. That would save you $6,300 in the 28% bracket.
9. State tax paid last spring. Did you owe tax when you filed your 2007 state tax return in the spring of 2008? Then, for goodness sakes, remember to include that amount with your state-tax deduction on your 2008 return, along with state income taxes withheld from your paychecks or paid via quarterly estimated payments.
10. Refinancing points. When you buy a house, you get to deduct points paid to get your mortgage in one fell swoop. When you refinance a mortgage, though, you have to deduct the points over the life of the loan. That means you can deduct 1/30th of the points a year if it's a 30 year mortgage -- that's $33 a year for each $1,000 of points you paid. Not much, maybe, but don't throw it away.
Even more important, in the year you pay off the loan -- because you sell the house or refinance again -- you get to deduct all as-yet-undeducted points. There's one exception to this sweet rule: If you refinance a refinanced loan with the same lender, you add the points paid on the latest deal to the leftovers from the previous refinancing ... and deduct the expense gradually over the life of the new loan.
11. Jury pay paid to employer. Many employers continue to pay an employees' full salary while they serving on jury duty, and some require the employees to turn over their jury fees to the company coffers. The only problem is that the IRS demands that you report those fees as taxable income. To even things out, you get to deduct the amount paid to your employer.
But how do you do it? There's no line on the Form 1040 labeled "jury fees." Instead the write-off goes on line 36, which purports to be for simply totaling up the deductions that get their own lines. Add your jury fees to the total of your other write offs and write "jury pay" on the dotted line.
12. Recovery rebate credit. Remember those glorious tax rebates we got last year -- $600 for singles, $1,200 for married couples, plus $300 for each qualifying child? Well, they were really a pre-payment of the recovery rebate credit that appears on 2008 tax forms. Most Americans got everything they deserved last year, so they won't get a dime from the credit.
But millions of American do qualify for the credit, and it will save the lucky ones hundreds of millions of dollars. Who might qualify? You might, if your financial situation was different in 2008 from 2007. The rebate was based on information on 2007 tax returns, you see; the credit is based on what's on your 2008 return.
If you had a baby or adopted a child in 2008, so you probably deserve $300 in the credit. Divorced parents who alternate claiming the kids as dependents can both earn $300 for the children. The parent who claimed the children on his or her 2007 return got the rebate; the parent who claims them on the 2008 return gets the credit. It's perfectly legal. An adult child who was claimed on his or her parents return in 2007 couldn't get a rebate. But if he or she isn't a dependent this year, a $600 credit may be in order.
Both the rebate and the credit phase out at higher income levels -- more than $75,000 on single returns or more than $150,000 on joint returns. So, if your 2007 income was too high to earn the full rebate, but your 2008 income is lower, you may deserve a credit now. There's a 29-line worksheet in the IRS instructions, and by late February, the IRS expects to have a special calculator at www.irs.gov.
13. Double Hope and Lifetime Learning credits. After last summer's floods in the Midwest, Congress approved many breaks to assist the victims. Most benefit only people who live in the affected areas. But one big break -- a doubling of the value of the Hope and Lifetime Learning college credits -- applies to parents anywhere whose children go to college in designated parts of seven states: Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska and Wisconsin.
If your son goes to school in Iowa City or Madison, Wisc., for example, your Hope credit for the first two years of college jumps to $3,600 per qualifying student, for example, while the lifetime learning credit for other higher education doubles from $2,000 to $4,000 per return. The credits phase out at higher income levels, but qualifying parents in the phase-out zone still get bigger credits thanks to this change.
14. Property tax deduction for non-itemizers. Normally, to write off property taxes, you must itemize deductions. But for 2008, even homeowners who claim the standard deduction -- as about two-thirds of all taxpayers do -- can use property taxes to trim their income tax bill. You can boost your standard deduction amount by $500 if you're single or $1,000 if you're married and file a joint return to account for property taxes you paid on your home during 2008.
15. Casualty loss deduction for non-itemizers. Normally, only taxpayers who itemize deductions can deduct casualty losses. But for 2008, taxpayers who claim the standard deduction -- again, that's most taxpayers -- can add their casualty losses to their standard deduction amounts ... if their loss occurred in a presidentially designated disaster area. Also, the casualty loss deduction for losses in presidentially declared disaster areas does not have to be reduced by an amount equal to 10% of your adjusted gross income. - boozedrinker, on 11/03/2009, -3/+10Buried for resizing my browser window.
- fxu1989, on 11/03/2009, -0/+7I'm not good at science, but I don't think 2 guys would be able to make one...
But we can... try....?
I'm the male. - jerryudigg, on 11/03/2009, -4/+11Income tax= part time slavery.
You can not have an income tax in a free country. - YME1280, on 11/03/2009, -0/+7Child-care credit? It's time to make some babies...who's with me!
- kolding, on 11/03/2009, -0/+6Free money? I'm in.
- bbqribs, on 11/03/2009, -0/+6One minor correction...
"Here’s an interesting dichotomy: Job-hunting expenses incurred while looking for your first job are not deductible; but moving expenses to get to that first job are. And you get this write-off even if you don't itemize. " - This does not have to be your first job. This can be ANY job, not just "your first job." THere are certain criteria that have to be met, and the IRS explains them all.
Oh, and the girl in #7 is pretty hot.
Also, the charity one isn't likely to have much of an effect unless you contribute more than $500. - 3tcp, on 11/03/2009, -0/+6Buried for slide show.
Buried for browser resizing. - PHR3AKSTORM, on 11/03/2009, -1/+7Buried for being a year old. Anyone notice the 2008 dates?
- mintedmeadow, on 11/03/2009, -0/+5"Free" does not mean "lawless". Laws would still exist, but they would only exist for the sole purpose of protecting its people's rights. In other words, laws against murder would exist; laws against drug use would not.
Police, public school systems, hospitals, et cetera, are all state/locally funded (or should be). As I stated in my comment above, states do not need to charge income tax to maintain infrastructure. My state covers its costs with sales tax.
Instead of income tax, you tax consumption. Wealthy people typically purchase more than the poor, and they also purchase more luxury items. - gbates31, on 11/03/2009, -0/+5But, but, but... roads?!?
- mintedmeadow, on 11/03/2009, -0/+5You don't need to pay income tax to pay for infrastructure.
My state does not tax on income; instead, it covers its costs via sales tax. - Omis, on 11/03/2009, -0/+4Why put the list on one page when you can stretch it out with a 15 page slide show?
- PeppermintPig, on 11/04/2009, -0/+4"There's no such thing as private roads because roads are not a private good. "
Private roads exist.
"Setting up a national transportation network of roads which require membership to use is simply not feasible."
Why is that?? Many membership/subscription based services function just fine. How is it that you can't imagine roads being paid for on a voluntary basis? People could pay a specific amount for their local upkeep, and road construction businesses could compete to lay out the best, most affordable roads. Licensing wouldn't be necessary, but property owners could instead use certification. There would be an incentive to make travel as easy as possible. Everything would become more affordable, as well, and you could see a larger influx of passenger rail. All sorts of solutions are possible when people are free to choose them and hold them accountable for costs. - brbeaird, on 11/03/2009, -0/+3I feel violated now.
- tacojohn48, on 11/03/2009, -0/+3If you don't know about most of this you shouldn't be doing your own taxes unassisted. At least use some sort of tax software.
- yikiad, on 11/03/2009, -0/+3you be the pivot man
- PeppermintPig, on 11/04/2009, -1/+3"But who funds federal programs, like the military? I suppose we could have each state defend itself with its own militia, and when we had a war we would mobilize a portion of each militia."
That's how it's SUPPOSED to work. The army is supposed to be disbanded until needed, and open invitation for people to form militia and coordinate efforts.
"Wait, I seem to remember something about some conflict about states rights versus federal rights and taxation and whatnot. As I remember it, the confederacy idea lost. They lost and, ironically, were forced to pay the first income taxes."
War doesn't determine who is right, only who is left.
Government has a bad habit of trying to justify itself, always growing and never cutting back, doing more harm than good to the people. - ether3a1, on 11/03/2009, -0/+2I'm using Safari and mine didn't resize, what are you using?
- tnoy, on 11/03/2009, -0/+2I'm using Firefox on my Mac and it resized it for me.
I wouldn't normally care, but it resized it to the wrong size. - simpleid, on 11/03/2009, -0/+2Instead of owing $150 I wound up getting $400 back after deducting interest paid on student loans. :D
- supermanly, on 11/03/2009, -2/+3So if you don't give a *****, why'd you just complain about it? It's an easily remedied problem.
- ttam, on 11/04/2009, -0/+1They're not giving you free money. They're taking away less of your money.
- 3tcp, on 11/03/2009, -1/+2Freedom can exist without anarchy and it can exist without the government taxing the labor of its citizens. This has been true historically. By implying that we must choose between anarchy and income taxes you are committing an obvious logical fallacy. I'm kind of embarrassed for you.
- linagee, on 11/03/2009, -3/+4At one point in our country's history, NOBODY WAS TAXED ON THEIR INCOME.
"The first United States income tax was imposed in July 1861, at 3% of all incomes over 800 dollars in order to help pay for the war effort in the American Civil War."
YES. If we never had a Civil War, there probably would be no income tax today. Add that to your list of things to change if you ever invent a time machine.
I would gladly have private roads and no income tax. - toolboxnj, on 11/03/2009, -0/+1Don't forget the 10% credit on motorcycles purchased in 2009-2011 up to $2,500 credit. Also, you are allowed to deduct the sales tax paid on the new bike. Buy a motorcycle, get a nice tax credit.
- shifty2, on 11/03/2009, -0/+1one page version, printable: http://www.kiplinger.com/printstory.php?pid=6681
- Zomgondo, on 11/04/2009, -0/+1"When a person must spend this much time fighting for his money rather than earning it, the incentives for making money become increasingly unproductive."
I know! That's why I don't work... why bother if I'm just going to pay taxes? It's waaaay better to be a bum and live under a bridge! - goband, on 11/03/2009, -3/+3In a free country, I could kill you and move into your house and chain up your wife in the basement and call her my wife.
Fortunately, we don't live in a free country.
You pay taxes to pay police and courts so I can't do that, and to pay for a national defense (army navy) to keep foreigners from doing it, and to pay for public schools and hospitals.
You want a free country, move to central Africa. Look how much they've prospered... - acidtonic, on 11/03/2009, -0/+0And I could instead capture you during your futile attempt, lock you up, then go out and capture YOUR family and proceed to feed you their fingers for what you tried to do.
Unfortunately those same laws prevent vigilante action because I'm pretty sure if I saw you on my property I'd beat the ***** out of you.
But it's a compromise..... - unluckier, on 11/03/2009, -3/+3Why the hell do you have your browser set up to allow that? Let alone allow some random site to run script on your system...
- 3tcp, on 11/03/2009, -3/+3There's no such thing as private roads because roads are not a private good. You cannot prevent someone from using them (unless you have checkpoints and entry gates which would severely limit their usefulness) nor does one's use of a road prevent someone else from using a road. Setting up a national transportation network of roads which require membership to use is simply not feasible.
- linagee, on 11/03/2009, -1/+1Maybe you can sue? They never said "THIS IS NOT LEGAL ADVICE. WE ARE NOT TAX PROFESSIONALS." I do agree with it being an incorrect interpretations of the code. (Of course that was not legal advice. I am not a tax professional.)
- goband, on 11/03/2009, -2/+1True historically like where?
- goband, on 11/04/2009, -2/+1Yes states can fund items that are in the state, like schools and hospitals and the police.
But who funds federal programs, like the military? I suppose we could have each state defend itself with its own militia, and when we had a war we would mobilize a portion of each militia. Or we could have federal sales taxes in addition to state and local sales taxes
But if each state runs its own budget, and provides for its own defense, and receives no federal funding, then wouldn't we be more of a..... confederacy?
Wait, I seem to remember something about some conflict about states rights versus federal rights and taxation and whatnot. As I remember it, the confederacy idea lost. They lost and, ironically, were forced to pay the first income taxes.
In any event, the taxes have to get paid somehow. Before or after you purchase something doesn't really matter. Your state doesn't charge any income tax. Great. But you have a higher sales tax. Your state is setup to attract workers, my state is setup to attract consumers (tourists). - acidtonic, on 11/03/2009, -2/+1Income tax doesnt pay for roads. Almost all income tax goes right to the Federal Reserve as interest paid on OUR money that THEY printed and LOANED our government.
Did I mention that the Federal Reserve is NOT federally owned but rather a PRIVATE corporation with private interests and private shareholders out to make a PROFIT. They were named as such to confuse us and blend in appearing as a government entity. - boozedrinker, on 11/03/2009, -6/+1Well, some might say I'm being lazy, stupid, and a fanboy, but I use Macs so I really don't give a *****.
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