Last Minute Tax Tips for First-Time (or Almost First-Time) Taxpayers

It is during or directly after the college years that most Americans learn about taxes. Paying income taxes for the first time can be a shock to the system. So here is what you need to know: It is your duty to pay as little in taxes as you legally can. The great American jurist Learned Hand (yes, that is his name) put it best, "[Everyone] must keep taxes as low as possible; for nobody owes any public duty to pay more than the law demands." So here are some suggestions to save on your taxes: *Take Advantage of College and Education* - You can deduct up to $3,000 of tuition and fees paid to eligible institutions (even if you do not itemize your deductions) provided your income is $65,000 or less. - Later in life, if you return to school, you can take advantage of Hope credits (up to $1,500 per student) or lifetime learning credits ($2,000 per year up to the first $10,000 of school expenses). - Up to $2,500 of student loan interest can be deducted per year provided your income does not exceed $65,000. *Job Expenses* - You may deduct all of the unreimbursed, provable expenses of job searching. This includes resume preparation, printing, mailing costs, contact calls and travel to job interviews. - If you are a teacher or other eligible education employee, up to $250 for classroom supplies can be deducted. - If you have to move to your new (or first job), you can deduct all of you moving expenses. You must meet certain mileage requirements, but if you do, all of the costs can be deducted. - If you are taking classes to improve your job skills, or buy books or magazines related to your work, these costs can be deducted. - Job-related car expenses can be deducted, including mileage at 37.5 cents per mile. This excludes, however, commuting from work to home. *Retirement Planning* The government wants you to plan for your retirement. You want to plan for your retirement. This is a perfect marriage. But be aware: there are strict and mandatory rules for amounts and eligibility for contributions, credits and deductions. Get professional advice! - Set up and make the maximum contribution to your IRA. Get a credit and deduction. - Make sure that you make contributions to your IRA. Consider a Roth IRA as well (you do not get a tax deduction, but none of the earnings and retirement withdrawals are ever taxed after a five-year waiting period). If you contribute a mere $2,000 per year at 4 percent for 40 years, you will be able to begin your retirement with $394,340. Can't be beat. - Make the maximum contribution to any 401(k) plan at your work. - If you get investment advice, the cost of this is deductible. *Charity and Environmental Concerns* Take advantage of doing good to save on taxes. - If you donate cash to a charity, it is totally deductible up to a maximum percentage of you total income. - Donations of items to charity are deductible up to their fair market value. - Your time given in charity work is not deductible, but driving there is at 14 cents per mile. - If you buy a hybrid car, you can deduct the cost of the electric (as opposed to the gasoline) portion of the price. The government has already figured out these amounts. For example, $2,000 of the cost of a new hybrid Ford Escape is deductible. Take advantage of every exception, deduction, credit and exemption that the tax laws allow. Pay your taxes but pay as little as is legally permitted. It is you duty to do both! _If you have any questions regarding the preparation of your taxes, thoroughly read your state and federal instruction manuals or seek help from a tax professional._ delicious | digg | technorati
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