10 Money Saving Tax Tips

April fifteenth is fast approaching. Have you filed your taxes yet? If you’re like most Americans, you’re probably still scurrying around trying to replica hermes bags vista get all the necessary papers together so that you can get started, all the while wondering if this might finally be the year that you receive a nice refund. Unfortunately, when all is said and done, you’ll probably have shelled out too much in taxes. There is no better time of year to draw attention to how much money we’re paying Uncle Sam, and he encourages all Americans to explore smarter tax tactics.Most people don’t realize that taxes are their biggest expense. Plus, they dread the Hermes replica Lindy whole tax issue so they avoid thinking about it and procrastinate making changes that could save them a significant amount of money.It’s important to take the time to understand what has changed in our national tax law and how it affects you specifically. There are things that you can do when filing this year’s return and throughout next year to reduce your tax burden. And, of course, there’s never a bad time to plan how you can make the most of what you birkin inspired replica handbags have left over after taxes.Anyone who followed the recent fiscal cliff showdown knows it ended in what’s been dubbed the American Taxpayer Relief Act of 2012. Here’s a quick look at its basics:If you’re single and your taxable income exceeds $400,000, or married, filing jointly and your taxable income exceeds $450,000, then income earned in excess of those amounts hermes belt replica will be taxed at the new higher rate of 39.6 percent.The estate tax exemption is now made permanent and set at $5,250,000 and will be indexed for inflation annually.Long term capital gains and dividends will be taxed at 20 percent for individuals with taxable incomes exceeding $400,000 and married couples filing jointly with taxable income exceeding $450,000.While the changes in tax law may complicate things for some, there are still many ways to keep more of your money. When you take the right steps, you can use your taxes to help accumulate wealth. In order to reach financial independence, it is imperative that you understand the basics of our tax system, and that you practice careful and strategic tax preparation and planning learn this here now so your personal tax burden does not deplete your income unnecessarily.Read on to learn how you can make the replica hermes himalayan bag price most of this year’s return.1. Make sure you aren’t missing out on any deductions. This new tax law signed in January extended a hbags reviews number of tax breaks that had expired at the end of 2011 or 2012. Some of these tax breaks could affect your 2012 tax return, which you will be filing in the coming months. Be sure not to overlook these tax deductions when preparing your income tax return this year:The optional deduction for state and local sales taxes in lieu of deducting state and local income taxes.The above the line deduction for up to $4,000 for qualified tuition and related expenses.The above the line deduction for up to $250 for classroom supplies purchased by teachers.The deduction for mortgage insurance premiums.The exclusion from income for cancellation of mortgage debt of up to $2 million on a principal residence.The good news is there are tons of possible deductions out there just like these, including deductions based on mortgage and loan interest, investment interest, and more.2. File an amended return for missed tax deductions and credits. If you missed any tax deductions or credits you were entitled to over the past few years, it’s not too late to correct that mistake by filing an amended return. Say you discover after filing that you have not taken advantage of several deductions or tax credits that you were entitled to. Don’t beat yourself up: You can file an amended return to claim an additional refund. Generally, the statute of limitations is three years from the date you filed your tax return. Therefore, you can file a claim or refund for the last three years of tax returns if you uncover a recurring error.This is a great way to improve your cash flow, and it’s a great example of why you hermes bracelet replica should meet with your tax advisor throughout the year. I can’t stress that enough. Again, there’s no better way to ensure you’re taking advantage of the deductions that apply my site to you than to get the help of a tax planner!3. Be smart about when you make certain payments. Many people aren’t aware that you may be able to shift income and deductions to the replica hermes bags tax year that will result in lower taxes. For instance (depending on your circumstances), if your estimated city and/or state income tax payments are due in January, you can pay them before December 31 and reduce your federal income tax liability by as much as 39.6 percent of the early payment. This is assuming you are not subject to alternative minimum tax.Likewise (again, depending on circumstances), prepaying your January mortgage payment in December and paying your first quarter real estate taxes before December 31 can help you to obtain tax breaks. Or you may also be able to shift income among family members to take full advantage of their lower tax brackets.4. Make full use of tax deferred accounts. These include IRAs, 401(k)s, annuities, and some life insurance contracts. The government allows you to postpone taxes on this income because they want to encourage you to be responsible and prepared for retirement. The Internal Revenue Code is a mechanism by which the government can influence taxpayers‘ behavior by giving them incentives to do or not do certain things. It views tax deferred accounts as a way of helping taxpayers save money for the long term and build a secure, comfortable, and sustainable retirement for themselves.Of course, you will eventually have to pay taxes on that deferred income when you withdraw it from those accounts. But that’s okay this is still one of the methods to achieve financial independence in a tax advantaged way. I recommend deferring taxes as long as possible, because every year your income is in an IRA, for example, the entire principal, including the money you would have had to pay in taxes plus earnings, will continue to compound. In essence, the government is giving you a tax free loan that you hermes replica can utilize to help maximize your savings. You’re earning money on your funds and the tax dollars you didn’t give up to the government.Another benefit of deferring income is that, most likely, you’ll be paying into these accounts during your higher earning years when your tax bracket is higher. If you draw the money out during retirement, you may be subject to a lower tax rate.5. Take full advantage of work expenses to maximize your tax free income. One way to increase your tax free income is to make sure your employer reimburses you for all expenses you paid that are within the guidelines set by your employer and the IRS.For instance, you can be reimbursed for business travel, meals and entertainment, expenses for a work vehicle, or continuing education. If you have any job related expenses that aren’t reimbursed by your employer, for example, union dues, job search expenses, and some classroom supplies for teachers, you may be able to get a tax deduction for the amount that exceeds 2 percent replica birkin bag of your adjusted gross income (AGI). Ultimately, though, getting reimbursed will always result in your paying less in taxes.6. Understand gift and estate tax changes. In technical terms, an estate tax is an excise tax levied on the right to pass property at death. It covers everything from real estate to cars to jewelry to investments and more, and is imposed by most state governments, as well as the federal government.Estate tax changes are often in flux. For instance, before the end of 2012, a wealthy individual could give gifts to his or her family members throughout his or her lifetime and receive an exemption for the first $5.12 million and avoid the gift tax and possibly the estate tax after death. However, the American Taxpayer Relief Act permanently changed the exemption to $5.25 million for 2013 and will also be indexed for inflation annually going forward. As you can see, it’s important to stay abreast of estate tax changes so that you can take advantage of them when the opportunity arises and prevent costly mistakes! As always, be sure that you’re working closely with a trusted tax advisor.7. Know what the Affordable Care Act means for your taxes. Under the Affordable Care Act, you have limited opportunities to deduct medical costs (including self paid medical insurance premiums) for you and your family. Starting in 2013, your deduction may be limited to only the amount that exceeds 10 percent (7.5 percent through 2012) of your AGI. With this new threshold for deducting health related costs, fewer people will be reviews hbags getting this tax break going forward. With that said, establishing a Health Savings Account (HSA) has just become so much more important. With an HSA, if your health insurance plan is considered a high deductible plan, you can contribute $3,250 as a single individual or $6,450 under a family plan, and an additional $1,000 if you are 55 or older.

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