5 Overlooked Tax Deductions from Turbo Tax

5 Overlooked Tax Deductions from TurboTax

According to TurboTax, 51 million tax payers itemized their deductions in 2007 claiming over 1.33 trillion in tax deductions. While 91 million tax payers claimed the standard deduction and reduced their taxes by 654 trillion. Now the numbers do look very good for the standard deduction tax payers but if you don’t look at both deduction methods when preparing your taxes, you could be missing out on some very good deductions.

For five often overlooked federal tax deductions look at state sales taxes paid, reinvestment dividends, charitable contributions, student load interest, and … Read more at 2009 Tax.

5 Overlooked Tax Deductions from TurboTax

According to TurboTax, 51 million tax payers itemized their deductions in 2007 claiming over 1.33 trillion in tax deductions. While 91 million tax payers claimed the standard deduction and reduced their taxes by 654 trillion. Now the numbers do look very good for the standard deduction tax payers but if you don’t look at both deduction methods when preparing your taxes, you could be missing out on some very good deductions.

For five often overlooked federal tax deductions look at state sales taxes paid, reinvestment dividends, charitable contributions, student load interest, and moving expenses related to a job.

State Sales Taxes Paid

For those that live in states that do not have a state income tax, you can deduct state sales tax. And often those that do file for a state sales tax deduction overlook such things as automobile sales tax, sales tax on a boat or an airplane and sales tax on home building supplies. The deduction does phase out around $250,000 for a couple, but is well worth looking into for those lucky tax payers that pay no state income tax.

Reinvested Dividends

If you sold a mutual fund during the tax year and think you have decent capital gains to pay on the fund proceeds, make sure to calculate reinvested dividends properly. Your basis or the amount you paid for the investment increases every time dividends are reinvested. Therefore, you capital gain might not be as large as you first thought.

Charitable Contributions

Small items that you purchased in the process of doing volunteer work for a charity are deductible just like larger checks made directly to organizations. Keep track of mileage you drove and small purchases made for charity, they will add up when you file your taxes.

Student Loan Interest

Student Loan Interest paid by parents of a student are now deductible as if they loan payments were made by the student. The IRS considers the loan payment a gift to the child and the child as paying the loan payments. Quite a nice treat to reduce and often eliminate all tax liability for the student.

Moving Expenses

If you started your first job during the tax year and needed to travel more than 50 miles to get to the location of your new job, you can deduct the costs of moving and the cost of driving. You cannot deduct the expenses needed to secure your first job, but you can deduct the costs to get to the new city where you will begin your career.

How To Maximize After-tax Returns

How To Maximize After-tax Returns

In order to keep taxable distributions from mutual fund distributions to a minimum, you must take into consideration tax-efficient funds for your investment portfolio.

In the context of tax-efficient investment, what is more significant than what you earn is what you can keep. The goal is to maximize your after-tax returns. The tax efficient mutual funds make applications to investments outside of IRAs, 401(k)s and other tax-deferred accounts.

T. Rowe Price, a renowned global investment management firm, opines that tax-efficient mutual funds are gaining fast popularity even in the face of deductions in tax Read more at 2009 Tax.

How To Maximize After-tax Returns

In order to keep taxable distributions from mutual fund distributions to a minimum, you must take into consideration tax-efficient funds for your investment portfolio.

In the context of tax-efficient investment, what is more significant than what you earn is what you can keep. The goal is to maximize your after-tax returns. The tax efficient mutual funds make applications to investments outside of IRAs, 401(k)s and other tax-deferred accounts.

T. Rowe Price, a renowned global investment management firm, opines that tax-efficient mutual funds are gaining fast popularity even in the face of deductions in tax rates.

Taxes do not feature among pleasant thoughts. However, investors aiming at reducing taxes and maximizing after-tax returns don’t really have a choice but to think about taxes. It is their job to keep track of their portfolio holdings, distributions and their huge volume of transaction data.

However, tax-efficient investment is not just about avoiding taxes, it is much more than that, as explained by Don Peters, who is in charge of a number of tax-efficient portfolios at the global investment management firm, T. Rowe Price.

He adds that correct tax-efficient investing means the ability to build and manage a portfolio of securities so as to enable you to hold on to it for a long period and ensure that you maximize your after-tax returns.

However, tax-efficient investments are not free from some misconceptions. A very common misconception is that it is not wise to buy stocks of companies that pay dividends, as the latter is believed to be taxable. Don Peters clarifies that the system is far from being so simple.

The second misconception in the context of tax-efficient investing is that investors can end up coughing up a considerable capital gains tax if they sell off their holdings. Peters warns investors against allowing tax phobia to stand in the way of smart and wise investment decisions.

He explains that investors might find it very difficult to arrive at a decision to sell, especially where a considerable unrealized capital gain is involved. Don Peters also mentions that to have a tax-efficient investment strategy to be successful and give good returns, profit should be maintained at a minimum but greater than zero.

7 Steps To Reduce Your Tax Related Stress

7 Steps To Reduce Your Tax Related Stress

If you have your own business what may haunt you most is the stressful task of filing your tax returns at the end of the year. Every year brings you the harrowing experience of piling up your financial documents and preparing your tax return. It adds to your worries if you have earnings in other countries as well, as you need to file your tax return from those countries as well.

Here are seven gradual steps that will certainly minimize your tax returns related hassles.

1. Maintain your accounts accurately. Buy a … Read more at 2009 Tax.

7 Steps To Reduce Your Tax Related Stress

If you have your own business what may haunt you most is the stressful task of filing your tax returns at the end of the year. Every year brings you the harrowing experience of piling up your financial documents and preparing your tax return. It adds to your worries if you have earnings in other countries as well, as you need to file your tax return from those countries as well.

Here are seven gradual steps that will certainly minimize your tax returns related hassles.

1. Maintain your accounts accurately. Buy a ruled ledger from the nearby stationery store and keep a record of your accounts.

2. Keep your receipts/bills in a safe place. Enter the finer details of the receipts into your accounts book once a week.

3. When you receive a payment, don’t forget to record that payment in your accounts system.

4. Browse through various accounting software packages available with your software retailer. Don’t go for a complex accounting software that may make your accounting more complicated instead of simplifying it. Choose a simple application. If spreadsheets and cell formula work better for you, keep your accounts in a spreadsheet program.

5. Now, open your tax return envelope without any delay. Check if all the sheets are there that you may need. If you find that any sheet is missing, you can download it.

6. Don’t leave your tax return job for the eleventh hour. Try to file your tax return well ahead of time. This will give IRS or the revenue department time to check your forms to ascertain how much you owe them. This is rather less stressful than calculating it yourself and continuing to doubt your calculations skills.

7. Analyze steps 3-6 again. If you feel they are not your cup of tea, you can hire an accountant. Of course, you will have to pay the accountant for keeping your accounts and for preparing your tax return. How much you will pay will depend on the complexity of the work the accountant will have to complete. If you have a habit of keeping a neat and clean accounts book and keeping a safe copy of each of your receipts, you may not have to pay a higher fee to your accountant.