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Tax Tips
| 2003 Tax Tips Archive
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| December 29th - Where is your principal residence? If you own more than one home, do you know which is your principal residence? It could be more important than you think. Why? Because when you sell a property, you can generally exclude up to $250,000 of gain ($500,000 for a married couple) from tax. December 22nd - Feeling charitable? Review the tax rules As the holidays approach, you're probably going to give a little extra to your favorite charity. If you itemize deductions, your kindness may bring you an extra reward in the form of a tax deduction. December 15th - There's still time for some last-minute deductions You still have time to cut your 2003 tax bill by squeezing in a few more itemized deductions. But first check that it still pays to itemize. The standard deduction for married filers increased to $9,500 this year. December 8th - Take time to review your investment portfolio As year-end approaches, it's a good time to review your investment portfolio. With the market recovering from its earlier lows, you may have some winners to offset the losers among your stocks and mutual funds. December 1st - Charity benefit events: What can you deduct? This is the season when we're often asked to buy tickets for charity events. The tickets are usually priced a little above market value because the proceeds are for a good cause. If you attend, what sort of tax write-off can you take? November 24th - Does the IRS owe you money? Are you still waiting to receive your check for the child tax credit from the IRS? If so, it might be because you moved this year and forgot to give the IRS your new address. November 17th - Flexible spending accounts become more flexible If you have a flexible spending account (FSA), life just became a little easier. Companies often include FSAs as part of a cafeteria plan of employee benefits. If you participate in a FSA, you can set aside pretax dollars from your paycheck to pay for certain unreimbursed health care or child care costs. November 10th - Know when to deduct mortgage points Did you refinance your mortgage this year? Or take out a mortgage for the first time? Millions of us did, attracted by the lowest rates in decades. But knowing how and when to deduct the mortgage points we paid is not quite so simple. The rules are slightly different for a first-time mortgage, a refinance, or a second refinance. Here's a quick recap. November 3rd - Sneak a peek at your 2003 tax bill This is the perfect time of year to take an advance look at your 2003 tax bill. By now you should have a pretty good handle on your likely earnings and tax deductions for the year. Yet there are still a couple of months left to make adjustments if you find you're heading for an underpayment penalty or looking at a bigger refund than you expected. October 27th - Some qualify for a tax credit to pay for health insurance Did you know that some workers and retirees can claim a tax credit to help pay for their health insurance costs? Two groups qualify for the credit, known as the Health Coverage Tax Credit (HCTC). If you are eligible, you can claim a tax credit to pay 65% of the costs of qualified health insurance coverage. October 20th - How to be a better informed voter - courtesy of the IRS The election season is in full swing, and we're being bombarded by ads and appeals from various political groups. But you can't always tell from the name who is behind a political group or who is providing the funding. Now the IRS has made it a lot simpler to find out. They've created a special Web site where it's easy to search for the answers. October 13th - Don't let your life insurance be subject to estate taxes Life insurance is a valuable tool for estate planning. By having adequate life insurance to pay estate taxes, you can leave more to the next generation. The pitfall is that if you have any "incidents of ownership" in the policy, proceeds from your life insurance will be included in your estate and will be subject to estate taxes. October 6th - If you're hit by disaster, look for the silver tax lining The IRS has announced special tax relief for certain taxpayers affected by Hurricane Isabel. If you had losses due to Hurricane Isabel or some other natural disaster this year, there are several provisions in the tax law that may provide relief. September 29th-Don't ignore deductions, or you might overpay your taxes Did you itemize your deductions on last year's tax return? Most taxpayers didn't. In recent years about 70% of filers have chosen the standard deduction instead of itemizing their state and local taxes, mortgage interest, charitable contributions, and other eligible deductions. September 22nd-Nonprofit organizations may have tax obligations If you're an officer or on the board of a community organization, you may wonder about the tax requirements that apply to your group. Generally an organization will not owe taxes if two things are true. September15th -Time is running out for effective 2003 tax planning It's September and a great time to put your 2003 tax planning into high gear. With three months left, there's still time to make meaningful changes. September 8th - Back to School: Check out these tax breaks September is back-to-school month. Here's a quick reminder of some education tax benefits that are new or improved in recent years. September 1st - Don't neglect estate planning Since there is no legal requirement to do estate planning, many of us let it slide. It is not like an income tax return that is required by law, so why should we bother? August 25th - Your corporation needs good corporate minutes Writing up the minutes of board of directors' meetings is not exactly a high priority for most business owners. Yet well-documented corporate minutes can provide valuable supporting evidence if your tax positions are ever questioned. August 18th - Starting a business? Some costs may be tax-deductible According to the tax law, you are allowed to take a tax deduction for ordinary and necessary business expenses if you are engaged in a trade or business. What about the expenses involved in investigating the potential for a new business? August 11th - Be aware of a new IRS audit program Be aware of a new IRS audit program called the National Research Program that is now underway. The program is measuring taxpayer compliance and error rates. Results will provide new benchmarks for the computer programs the IRS uses to flag returns for its regular audit activities August 4th -Your check may be in the mail On Friday, July 25, the first of some 25 million checks were mailed to taxpayers by the federal government. The checks are an advance payment of the 2003 increase in the child tax credit provided by this year's new tax law. July 28th-There are tax breaks when you do charitable work If you do volunteer work for a charitable organization and have not kept track of your out-of-pocket expenses, you might be passing up an excellent opportunity to lower your tax bill. To qualify, your unreimbursed expenses must relate directly to the charity, and you must itemize your deductions on your tax return. Here is a brief rundown of some possible deductions. July 21st-Don't get caught in an illegal tax shelter The economic slowdown hasn't affected one group of people – promoters selling tax shelters. Some shelters are perfectly legal, but many are termed abusive by the IRS. July 14th-An amended return may make sense for you Since the tax return deadline for 2002 has come and gone, you may be tempted to file your tax records and forget about them. However, there may be some situations in which you may want to re-visit your taxes and file an amended return to claim a refund. July 7th- Reduce taxes when you make business purchases The new tax law offers two ways to take faster tax write-offs when you buy equipment for your business.The new tax law offers two ways to take faster tax write-offs when you buy equipment for your business. June 30th-Should you change your tax payments? The new tax law cut 2003 tax rates for many taxpayers. With lower tax rates, you may be wondering if you should change your tax withholding or quarterly tax estimates. The answer depends on how you earn your income. June 23rd-Should you expect a refund check for the child tax credit? This year's tax legislation raised the child tax credit from $600 to $1,000 per child, effective for 2003. Congress has instructed the IRS to mail out checks this summer for the amount of the 2003 increase. The idea is to pump money into the economy now, rather than waiting until people file for their refunds next year June 16th-Are your children ready for a summer job? If your children are planning to work this summer, make sure you and they know the basics on taxes. June 9th-Plan for lower investment taxes There's good news if you have investment income from dividends or capital gains. The new tax law cuts the tax rate on both. It's worth doing a little planning to maximize your tax savings. June 2nd-New tax law may call for changes in your 2003 planning On May 28, 2003, President Bush signed the 2003 Tax Act into law. All the tax cuts in the new law affect 2003 taxes, so you should take them into account in this year's tax planning. Here's a quick summary of the key provisions. May 26th - Your boat or RV might be your second (tax) home You may spend so much time in your boat or RV that it feels like a second home. Did you know that the IRS might agree with you? In fact, a boat or recreational vehicle can qualify for some of the tax breaks associated with a second home. Specifically, interest you pay on a loan to purchase a boat or RV could be deductible as mortgage interest. May 19th - You may qualify for a tax break when you sell vacant land You probably know that you can exclude up to $250,000 of gain ($500,000 for most joint filers) when you sell your principal residence. Recent IRS regulations may now allow you to apply this gain exclusion when you sell vacant land that is adjacent to your home. May 12th - Is it time to check your withholding? Did you receive a big refund on your 2002 taxes? Or worse still, did you wind up with an unexpected tax bill? In either case it might be time to adjust your withholding May 5th - Watch out for use taxes when you shop out of state Everyone has heard of sales tax, but few people are familiar with use tax. Use taxes are similar to state sales taxes but with one difference. A sales tax is levied on purchases made within the state. A use tax is levied on purchases made out of state when the goods are brought into the state to be used. April 28th - The disabled get tax breaks A variety of tax breaks are available to help disabled taxpayers cope with the financial burdens of disability. April 21st - A gift isn't complete without tax records Imagine this scenario. Your wealthy Uncle John is something of an art collector, buying paintings and sculptures from promising young artists. When he retires, he moves into a small condo in a retirement community and has to downsize his art collection. He gives away much of his art to family members, and you receive an abstract painting. He tells you that he paid $5,000 for it only two years ago. April 14th - Self-employment gives you some tax breaks When it comes to taxes, being self-employed has some advantages. Whether you work for yourself on a full-time basis or just do a little moonlighting on the side, the government has provided you with a variety of attractive tax breaks. April 7th - The "saver's credit": one more reason to save for retirement Did you know you might be able to earn a tax credit as well as a tax deduction for contributing to your IRA or company retirement plan? March 31st - Look for last minute tax savers Time is short, but it's not too late to trim your 2002 tax bill. Here are some last minute moves to consider and deductions you don't want to overlook. March 24th - If you can't file on time, get an extension April 15th will be here before you know it. If you won't be able to complete your income tax return by then, don't forget to file a Form 4868 with the IRS to give yourself up to four additional months to get it done. March 17th - There's good news for taxpayers who claim a home office deduction If you've been deducting home office expenses and you're now ready to move, you'll like the new rules issued by the Internal Revenue Service. That's because when you sell your residence, you may be able to exclude most of the gain on your home office. March 10th - Consider your tax filing status when planning for divorce It's difficult enough to think about taxes under normal circumstances. Finding yourself amid a divorce action can make this task even more daunting. A little planning, however, may ease this burden. Consider, for example, the following ideas about your tax filing status if your divorce wasn't final by December 31, 2002. March 3rd - Timing matters on tax losses for worthless securities In the last few years, you may have purchased stock in a dot-com that's now out of business, or in another company whose share price is now just pennies. Does this mean you can take a tax loss for a worthless security? February 24th - Make sure you use correct social security numbers It's that time of year when we're filling out tax returns, either electronically or on paper. This year it's more important than ever to check that all the social security numbers you enter on the return are correct. February 17th - Check the year-end information forms you receive By now you should have received your information forms for 2002. These are the W-2s and 1099s you receive from employers, banks, and brokerage houses reporting wages, interest, dividends, and other types of income. February 10th - A tax professional gives you more than a tax return At this time of year, advertising for tax preparation software is everywhere. You may be asking yourself, "Why do I need a tax professional when sophisticated tax software is readily available? After all, tax software contains all the latest tax changes and automatically checks for arithmetic errors." February 3rd - Know the tax difference between alimony and child support Divorce is a sad experience for all concerned. The last thing you want to think about is taxes, but tax issues are important. If you fail to negotiate your divorce settlement with taxes in mind, you may regret it for years to come. Janurary 27th - Get a tax credit for child care expenses Do you pay for child care so you can work? If you do, don't overlook the child and dependent care credit, which directly offsets the taxes you owe. January 20th - Get tax relief when disaster strikes Wildfires and floods in the summer, tornadoes in November, ice storms in December - 2002 was a typical year for disasters. January 13th - Shift income to your child to reduce taxes One proven way to reduce taxes is to shift a portion of your income to someone in a lower tax bracket. Here are some ideas to achieve that by shifting income to your child. Janurary 6th - Pay attention to the "nanny tax" Do you remember the nanny tax scandals? In recent years, several high-profile political figures had their appointments derailed because it turned out they hadn't paid their nanny taxes. You may not lose out on high political office, but you could be liable for interest and penalties if you overlook this tax. |
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