While tax time isn’t until April 15th 2012 but there are several actions you can take over the next several days that will either reduce what you pay Uncle Sam or increase your tax return come April. Here are some end of the year tax savings tips to do before you ring in the new year.
End Of The Year Bonus
Are you expecting an end of the year bonus? Well you’ll have to pay taxes on that bonus. If you don’t want your taxes to be too high this year, ask your employer defer the payment until the first of January. Sure, you’ll still have to pay taxes on that income, but not until April 2013. So put the money in an interest-bearing account and collect the interest for well over a year, rather than just a few months.
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When you get a big tax refund, you shouldn’t get too excited. It’s not a bonus, it’s not free money. It’s your own money that you overpaid the government throughout the year.
If you’ve gotten a pretty large refund, you should adjust your federal tax withholding. The reason is simple, it’s your money and you should have it, not the IRS. When the IRS returns that money to you after filing your taxes, they don’t pay it back with interest. You could have kept the money in a savings account and earned at least 20 bucks in interest.
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When you get a tax refund, don’t treat it as free money. It was yours all along. You overpaid your taxes and now the IRS is giving you the money back, without paying you interest. Ideally you’ll want to get the smallest refund possible in order to get the benefit of that money throughout the year.
When you think of a refund check as your own money, rather than a bonus, you’ll hopefully spend it wiselier. Here are some wise suggestions on what to do with your tax refund.
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Have you done your taxes yet? The clock is ticking as April 15th is here again. But while the traditional filing deadline is usually the 15th of April, this year you’re getting a couple of extra days to file. The tax filing deadline for your 2010 federal income taxes is going to be: April 18th, 2011. This was done in observation of Emancipation Day in the District of Columbia.
If you know that you’re going to be late on your taxes, don’t fret. You can file an extension with Form 4868. It’s free and it buys you six more months time. If you file your taxes late and don’t get an extension then you could be subject to late fees. Your new deadline will then be October 17th, 2011.
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Every year, about half of Americans overpay their federal income tax and are issued a tax refund. Even if you file electronically and use the best tax software you don’t get your refund immediately after filing your taxes. It could take a few weeks to get the money in your account or to get a refund check in the mail.
Scrupulous tax preparation companies will offer a “service” to their customers. It’s called a cash refund anticipation loan (RAL). The tax prep company will give you your refund immediately in cash (minus some fees). Then when your tax refund comes in, they’ll keep all of it.
A RAL is a predatory lending practice. It is targeted to the poor, since they are the ones who would need the cash instantly rather than wait for their refund. It is also targeted to the poor because they are less likely to have a bank account for a direct deposit of their refund.
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As another year comes to a close we come to the realization that taxes are going to be due soon. For those of us with their own business, we can be a little more creative than most with their taxes. A good thing to do at the end of the tax year is to increase your business expenses in order to increase your deductions and lower your tax bill.
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It’s tax time again and while it’s usually a time for the added expense of hiring a tax preparer, you don’t have to do that. If your situation hasn’t changed, you can do your taxes on your own. Turbo Tax is popular but I prefer using eSmartTax online. It’s free to do your federal taxes and it’s cheap to file your state taxes. The best part is that there is no paperwork, you just input your income information from your w2′s and answer the simple questions about your status (single, kids, etc) and the program does all the calculations and putting the right numbers in the right boxes for you.
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With just a month left in the year now is the time to think about your 2009 tax returns. Here are some unique end of the year tax tips.
– If you feel you’ve earned too much this year ask whoever pays you to defer payments until January 1st. That way you won’t pay taxes on those earnings until April 2011.
– If your wife gives birth bu the end of the month you can claim another dependent this year.
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Part of the Ethernity
