ABOUT TAXES, THE FUNDAMENTAL OF TEXESFOR
BUSINESS
BUSINESS
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THE FUNDAMENTAL OF TAXES
C Corporation
Pros
Cons
Liability limited in case of lawsuit
Double taxation occurs when dividends are paid to shareholders
Shareholders risk only their investment
Corporations must comply with recordkeeping and other government regulations
Corporation can survive the death of owner, officer, or shareholder
State laws can limit operating flexibility
Easy to sell small portions of stock to raise capital
Tax rate may be lower
Corporation can elect different year-ends than shareholders—helpful for tax planning
Corporation can provide certain benefits not available to other entities
Also named from a chapter in the tax code, S corporations offer the same legal protection as C
corporations but don’t pay corporate taxes. Instead, shareholders report the company’s income and
losses on their individual tax returns. The tax may be higher at the individual level than it would have
been at the C corporate level, but because the S corporation itself pays no taxes, the income is only
taxed once, not twice as it can be with the C corporation.
Let’s say your business isn’t yet profitable and you’re earning money from another source, such as a
part-time job. The money from this other source is taxable, but if you have an S corporation, you can
reduce the amount of your total tax by deducting your S corporation operating loss from income
being earned from other sources. Reducing the amount of taxable income in this way may add up to
significant tax savings.
S Corporation
Pros
Cons
No double taxation
Company must be registered as a domestic corporation
Changing from C to S and from S to C is possible
Corporation can issue only one class of stock
Limited number of shareholders can own stock
Limitations on who qualifies for shareholder status
Limited-Liability Company (LLC)
This relatively new type of business is a cross between a C corporation and a partnership. An LLC
gives its shareholders, or members, all the legal protection that a corporation offers, but an LLC may
elect how it is to be taxed, whether as a corporation or as a partnership. This is called the “check the
box” election. If the LLC elects to be taxed as a partnership, it means that profits earned by the LLC
are passed through to the members, who report them on their individual tax returns.
If the legal protection and the tax setup are the same for both an LLC and an S corporation, how is
an LLC different? In an S corporation, there are certain laws restricting the number of shareholders
and also the type of stock that can be issued. With an LLC, none of that applies. Thus an LLC has
more flexibility than an S corporation. But there’s a downside. Because LLCs are relatively new, there
is no solid history of legal test cases, and laws governing LLCs vary from state to state. Some states
have “bulletproof” laws, meaning that if you establish an LLC and follow all the rules, you’ll
automatically be given favorable tax status. In other states you may follow all the rules but not gain
favorable tax status. It’s best to check with a legal expert before forming an LLC.
Limited-Liability Company
Pros
Cons
Owners or members have management authority
More expensive to open than a partnership
Allows an unlimited number of shareholders
Rules may vary by state
Can elect to have income or loss pass through to members’ returns
Must have consent of members to transfer interest to another person
Liability protection of a corporation with no responsibility for debts
The Secret of the Rich
Now that you know something about corporations, you have more insight into the secret of the rich.
This secret has been around ever since the days of sailing ships, when the rich created the
corporation as a vehicle to limit their risk. The rich would put their money into a corporation to
finance a voyage. If the ship was lost the crew lost their lives, but the loss to the rich would be limited
to the money they invested for that particular voyage. Corporations can protect assets and serve as
vehicles for the creation of new assets. If you understand that basic secret, then you’re ready to
master the art of building the B-I triangle.
C Corporation
Pros
Cons
Liability limited in case of lawsuit
Double taxation occurs when dividends are paid to shareholders
Shareholders risk only their investment
Corporations must comply with recordkeeping and other government regulations
Corporation can survive the death of owner, officer, or shareholder
State laws can limit operating flexibility
Easy to sell small portions of stock to raise capital
Tax rate may be lower
Corporation can elect different year-ends than shareholders—helpful for tax planning
Corporation can provide certain benefits not available to other entities
Also named from a chapter in the tax code, S corporations offer the same legal protection as C
corporations but don’t pay corporate taxes. Instead, shareholders report the company’s income and
losses on their individual tax returns. The tax may be higher at the individual level than it would have
been at the C corporate level, but because the S corporation itself pays no taxes, the income is only
taxed once, not twice as it can be with the C corporation.
Let’s say your business isn’t yet profitable and you’re earning money from another source, such as a
part-time job. The money from this other source is taxable, but if you have an S corporation, you can
reduce the amount of your total tax by deducting your S corporation operating loss from income
being earned from other sources. Reducing the amount of taxable income in this way may add up to
significant tax savings.
S Corporation
Pros
Cons
No double taxation
Company must be registered as a domestic corporation
Changing from C to S and from S to C is possible
Corporation can issue only one class of stock
Limited number of shareholders can own stock
Limitations on who qualifies for shareholder status
Limited-Liability Company (LLC)
This relatively new type of business is a cross between a C corporation and a partnership. An LLC
gives its shareholders, or members, all the legal protection that a corporation offers, but an LLC may
elect how it is to be taxed, whether as a corporation or as a partnership. This is called the “check the
box” election. If the LLC elects to be taxed as a partnership, it means that profits earned by the LLC
are passed through to the members, who report them on their individual tax returns.
If the legal protection and the tax setup are the same for both an LLC and an S corporation, how is
an LLC different? In an S corporation, there are certain laws restricting the number of shareholders
and also the type of stock that can be issued. With an LLC, none of that applies. Thus an LLC has
more flexibility than an S corporation. But there’s a downside. Because LLCs are relatively new, there
is no solid history of legal test cases, and laws governing LLCs vary from state to state. Some states
have “bulletproof” laws, meaning that if you establish an LLC and follow all the rules, you’ll
automatically be given favorable tax status. In other states you may follow all the rules but not gain
favorable tax status. It’s best to check with a legal expert before forming an LLC.
Limited-Liability Company
Pros
Cons
Owners or members have management authority
More expensive to open than a partnership
Allows an unlimited number of shareholders
Rules may vary by state
Can elect to have income or loss pass through to members’ returns
Must have consent of members to transfer interest to another person
Liability protection of a corporation with no responsibility for debts
The Secret of the Rich
Now that you know something about corporations, you have more insight into the secret of the rich.
This secret has been around ever since the days of sailing ships, when the rich created the
corporation as a vehicle to limit their risk. The rich would put their money into a corporation to
finance a voyage. If the ship was lost the crew lost their lives, but the loss to the rich would be limited
to the money they invested for that particular voyage. Corporations can protect assets and serve as
vehicles for the creation of new assets. If you understand that basic secret, then you’re ready to
master the art of building the B-I triangle.
THE FUNDAMENTAL OF TAXES----- PART TWO
“In this world nothing
can be said to be certain,
except death and taxes.”
— Benjamin Franklin
Nobody likes taxes. Ever since the Boston Tea Party in 1773, when colonists dumped British tea into
Boston Harbor rather than paying the tax on it, Americans have been seeking ways to avoid giving
their hard-earned money to the government. Their efforts have been in vain. Today the Internal
Revenue Service is a fact of life, and we all have to pay taxes. But there’s no reason you have to
hand over more than your fair share. If you take the time to learn some of the basics of tax law, you’ll
reduce your burden and keep more of your money. By becoming financially literate, you’ll learn what
the rich already know: While you can’t beat the IRS, you can turn it to your advantage.
“That the institution of the income tax will tend to silence all boasting about wealth may ... be
regarded as one blessing associated with it; we know at present of no others.”
—The New York Times in 1913, the year income tax was introduced
Income Tax: A Pocket History
Personal income tax is a relatively new phenomenon in American life. It wasn’t until 1863 that the
federal government even began collecting income tax to fund the war effort, and nine years later the
tax was repealed. For the next forty-one years the government funded most of its activities by levying
duties on imported goods such as wool and shoes. The system of duties, however, prevented the
United States from gaining a competitive edge in world trade. Thus in 1913 Congress reduced duties
on imported goods and, to make up for the loss in revenue, ratified the 16th Amendment to the
Constitution legalizing personal income tax.
During World War II, paycheck withholding was introduced. Under this system, taxes were taken out of
a person’s paycheck each payday instead of annually, giving the government enough ready cash to
cover the cost of the war. To reduce government borrowing, the tax rate was also raised, in some
cases to a whopping 94 percent of personal income. Since then rates have settled back down, but
not—as the tax wars of the last few decades suggest—to everyone’s satisfaction.
Becoming Tax LiterateThe U.S. tax system is progressive, meaning people earning more money pay
tax at a higher rate than people earning less. If only it were that simple ... The present Byzantine tax
code may have your money passing through more than one tax bracket before your final tax bill is
calculated. The rate you pay depends on many factors, not just your income but whether you’re
married or single, how many children you have, and so forth. So complicated is the tax system that
some lawmakers in Washington have repeatedly called for a straightforward proportional tax, that is, a
tax that takes the same percentage of each person’s income. It is often called the flat tax.
Instead of overhauling the tax code, Congress is forever tinkering with it, changing this and adding
that. The result resembles a house built without blueprints. Doors give way to walls, and staircases
lead nowhere. Many laws are written to favor investors, others are not. It’s important to know the laws,
and it can be very expensive if you don’t.
For instance, in 1986 Congress passed the Tax Reform Act which eliminated the tax break for real
estate investors whose expenses on rental properties exceeded the rents they collected. When the law
changed and the government stopped subsidizing people for losing money, some people went
bankrupt and the stock market took a steep dive. It’s never a good idea to invest in something just to
avoid paying taxes or in something that’s losing money. The idea is to make money, not lose it. The
1997 Taxpayer Relief Act introduced a whole new set of rules, and it contained some good news for
some. For example, now if you’re married and you sell your house, you can avoid paying capital
gains tax on profits up to $500,000. The law is always changing, and the best way to reduce your tax
burden is to keep abreast of developments. How? By watching the financial news on television,
reading the financial section of your newspaper, or consulting your tax attorney or accountant.
“In this world nothing
can be said to be certain,
except death and taxes.”
— Benjamin Franklin
Nobody likes taxes. Ever since the Boston Tea Party in 1773, when colonists dumped British tea into
Boston Harbor rather than paying the tax on it, Americans have been seeking ways to avoid giving
their hard-earned money to the government. Their efforts have been in vain. Today the Internal
Revenue Service is a fact of life, and we all have to pay taxes. But there’s no reason you have to
hand over more than your fair share. If you take the time to learn some of the basics of tax law, you’ll
reduce your burden and keep more of your money. By becoming financially literate, you’ll learn what
the rich already know: While you can’t beat the IRS, you can turn it to your advantage.
“That the institution of the income tax will tend to silence all boasting about wealth may ... be
regarded as one blessing associated with it; we know at present of no others.”
—The New York Times in 1913, the year income tax was introduced
Income Tax: A Pocket History
Personal income tax is a relatively new phenomenon in American life. It wasn’t until 1863 that the
federal government even began collecting income tax to fund the war effort, and nine years later the
tax was repealed. For the next forty-one years the government funded most of its activities by levying
duties on imported goods such as wool and shoes. The system of duties, however, prevented the
United States from gaining a competitive edge in world trade. Thus in 1913 Congress reduced duties
on imported goods and, to make up for the loss in revenue, ratified the 16th Amendment to the
Constitution legalizing personal income tax.
During World War II, paycheck withholding was introduced. Under this system, taxes were taken out of
a person’s paycheck each payday instead of annually, giving the government enough ready cash to
cover the cost of the war. To reduce government borrowing, the tax rate was also raised, in some
cases to a whopping 94 percent of personal income. Since then rates have settled back down, but
not—as the tax wars of the last few decades suggest—to everyone’s satisfaction.
Becoming Tax LiterateThe U.S. tax system is progressive, meaning people earning more money pay
tax at a higher rate than people earning less. If only it were that simple ... The present Byzantine tax
code may have your money passing through more than one tax bracket before your final tax bill is
calculated. The rate you pay depends on many factors, not just your income but whether you’re
married or single, how many children you have, and so forth. So complicated is the tax system that
some lawmakers in Washington have repeatedly called for a straightforward proportional tax, that is, a
tax that takes the same percentage of each person’s income. It is often called the flat tax.
Instead of overhauling the tax code, Congress is forever tinkering with it, changing this and adding
that. The result resembles a house built without blueprints. Doors give way to walls, and staircases
lead nowhere. Many laws are written to favor investors, others are not. It’s important to know the laws,
and it can be very expensive if you don’t.
For instance, in 1986 Congress passed the Tax Reform Act which eliminated the tax break for real
estate investors whose expenses on rental properties exceeded the rents they collected. When the law
changed and the government stopped subsidizing people for losing money, some people went
bankrupt and the stock market took a steep dive. It’s never a good idea to invest in something just to
avoid paying taxes or in something that’s losing money. The idea is to make money, not lose it. The
1997 Taxpayer Relief Act introduced a whole new set of rules, and it contained some good news for
some. For example, now if you’re married and you sell your house, you can avoid paying capital
gains tax on profits up to $500,000. The law is always changing, and the best way to reduce your tax
burden is to keep abreast of developments. How? By watching the financial news on television,
reading the financial section of your newspaper, or consulting your tax attorney or accountant.
THE FUNDAMENTAL OF TAXES---- PART THREE
Partnership
A partnership is two or more people co-owning a business for profit. The partners agree to
establish and run the business, sharing in profits, assuming responsibility for all losses and
liabilities, and paying all taxes, which are paid at the individual rate. There are two types of
partnerships: general and limited.
In a general partnership, the partners have full rights to control all the day-to-day affairs of the
business. They also share all the liability for the partnership’s debts or obligations. If the
partnership’s assets are insufficient to meet its obligations to creditors, or if a third party is
damaged or injured, then each partner’s personal assets can be taken to satisfy the debt.
Partnership
Pros
Cons
Combined assets and expertise
Partnership terminates on death or withdrawal of any partner
Flexible decision making
Partners totally liable
Partners, not partnership, taxed at the individual level
Each partner can enter into other business agreements, so control is difficult
Business expenses deductible
Each partner is individually liable for agreements made by any partner
Ease of formation
A limited partnership has both general partners, who run the daily business and make all the
decisions, and limited or silent partners, who generally put up the money in hopes of profit.
Limited partners have limited financial liability, meaning that if a creditor or an injured party
sues, limited partners can’t be held responsible for any more than the amount they originally
invested. When it comes to taxes, general partners and limited partners are treated the same
way. Any profits from the business go directly to them, that is, they are “passed through” to all
the partners, who report their share of the partnership net income on their individual tax returns.
Limited Partnership
Pros
Cons
Limited partners are not personally liable for the partnership’s debts and obligations
Transfer of interest usually requires general partner approval
Partnership does not dissolve with death of limited partner
Complete and separate paperwork filings
Number of partners/owners unlimited
Limited partners have little, if any, control over daily operations
Corporation
Most people think of a corporation as a business in a big building with lots of employees. A
corporation is really nothing more than a way of doing business. It is a legal entity regarded as
separate from the owner, one that offers distinct tax advantages as well as liability protection
from creditors and others who might sue. The owner controls the corporation and is a
shareholder, possibly the only shareholder. As owner and shareholder, the owner is the boss.
KNOWLEDGE FINANCIAL Tip
“Utilizing the corporation is one of the secrets of the rich: Own nothing, but control everything.”
The owner controls what happens in the corporation, but because the corporation is a separate
entity, the owner doesn’t own any of the corporation’s assets and therefore doesn’t have to
assume any of the corporation’s debts. The corporation owns its own assets and pays its own
debts. This is one of the secrets of the rich: Own nothing, but control everything. This was Rich
Dad’s favorite form of entity in which to build businesses.
There are two types of corporations: C and S. The C corporation, named for Subchapter C of the
federal tax code, is also known as a regular corporation. It offers all the legal protection just
mentioned but is taxed as a separate entity. In general, income tax rates for a corporation are
lower than rates for individuals. After the C corporation deducts business expenses from its
income, tax is paid on the corporation’s profits. The owner/shareholder in turn pays tax on any
money received from the corporation, usually in the form of a salary or bonus, and the
corporation can deduct these payments as expenses on its tax return. However, when a
corporation pays a dividend to its shareholders, the dividends are taxable to the shareholders
but not deductible by the corporation. This is often called double taxation, that is, tax is paid on
the income by the corporation when it earns the money, and tax is paid again by the shareholder
when the corporation pays a dividend with that same money.
But there’s a way around double taxation, and the rich use it all the time. When the C corporation
deducts legitimate business expenses and pays out profits in the form of compensation to its
shareholders, there may be no taxable income left. In that case, the corporation doesn’t have
enough income left to pay dividends. Shareholders must report any compensation (deducted on
the corporation’s return) on their individual tax returns, but they have no dividend income to
report. Taxation occurs once, not twice. Note: The shareholders must be performing duties for
the compensation they are receiving, and compensation should be reasonable, not excessive.
Another advantage of the C corporation is in the area of fringe benefits. The C corporation
usually gets a deduction for fringe benefits, and the employee does not recognize taxable
income. Many of the fringe benefits available to the C corporation are not available to, or are
restricted in, an S corporation, partnership, or LLC. For example, a C corporation can make
contributions towards life, accident, health, or other insurance deductibles and offer tax-free
benefits under a medical-expense reimbursement plan.
Partnership
A partnership is two or more people co-owning a business for profit. The partners agree to
establish and run the business, sharing in profits, assuming responsibility for all losses and
liabilities, and paying all taxes, which are paid at the individual rate. There are two types of
partnerships: general and limited.
In a general partnership, the partners have full rights to control all the day-to-day affairs of the
business. They also share all the liability for the partnership’s debts or obligations. If the
partnership’s assets are insufficient to meet its obligations to creditors, or if a third party is
damaged or injured, then each partner’s personal assets can be taken to satisfy the debt.
Partnership
Pros
Cons
Combined assets and expertise
Partnership terminates on death or withdrawal of any partner
Flexible decision making
Partners totally liable
Partners, not partnership, taxed at the individual level
Each partner can enter into other business agreements, so control is difficult
Business expenses deductible
Each partner is individually liable for agreements made by any partner
Ease of formation
A limited partnership has both general partners, who run the daily business and make all the
decisions, and limited or silent partners, who generally put up the money in hopes of profit.
Limited partners have limited financial liability, meaning that if a creditor or an injured party
sues, limited partners can’t be held responsible for any more than the amount they originally
invested. When it comes to taxes, general partners and limited partners are treated the same
way. Any profits from the business go directly to them, that is, they are “passed through” to all
the partners, who report their share of the partnership net income on their individual tax returns.
Limited Partnership
Pros
Cons
Limited partners are not personally liable for the partnership’s debts and obligations
Transfer of interest usually requires general partner approval
Partnership does not dissolve with death of limited partner
Complete and separate paperwork filings
Number of partners/owners unlimited
Limited partners have little, if any, control over daily operations
Corporation
Most people think of a corporation as a business in a big building with lots of employees. A
corporation is really nothing more than a way of doing business. It is a legal entity regarded as
separate from the owner, one that offers distinct tax advantages as well as liability protection
from creditors and others who might sue. The owner controls the corporation and is a
shareholder, possibly the only shareholder. As owner and shareholder, the owner is the boss.
KNOWLEDGE FINANCIAL Tip
“Utilizing the corporation is one of the secrets of the rich: Own nothing, but control everything.”
The owner controls what happens in the corporation, but because the corporation is a separate
entity, the owner doesn’t own any of the corporation’s assets and therefore doesn’t have to
assume any of the corporation’s debts. The corporation owns its own assets and pays its own
debts. This is one of the secrets of the rich: Own nothing, but control everything. This was Rich
Dad’s favorite form of entity in which to build businesses.
There are two types of corporations: C and S. The C corporation, named for Subchapter C of the
federal tax code, is also known as a regular corporation. It offers all the legal protection just
mentioned but is taxed as a separate entity. In general, income tax rates for a corporation are
lower than rates for individuals. After the C corporation deducts business expenses from its
income, tax is paid on the corporation’s profits. The owner/shareholder in turn pays tax on any
money received from the corporation, usually in the form of a salary or bonus, and the
corporation can deduct these payments as expenses on its tax return. However, when a
corporation pays a dividend to its shareholders, the dividends are taxable to the shareholders
but not deductible by the corporation. This is often called double taxation, that is, tax is paid on
the income by the corporation when it earns the money, and tax is paid again by the shareholder
when the corporation pays a dividend with that same money.
But there’s a way around double taxation, and the rich use it all the time. When the C corporation
deducts legitimate business expenses and pays out profits in the form of compensation to its
shareholders, there may be no taxable income left. In that case, the corporation doesn’t have
enough income left to pay dividends. Shareholders must report any compensation (deducted on
the corporation’s return) on their individual tax returns, but they have no dividend income to
report. Taxation occurs once, not twice. Note: The shareholders must be performing duties for
the compensation they are receiving, and compensation should be reasonable, not excessive.
Another advantage of the C corporation is in the area of fringe benefits. The C corporation
usually gets a deduction for fringe benefits, and the employee does not recognize taxable
income. Many of the fringe benefits available to the C corporation are not available to, or are
restricted in, an S corporation, partnership, or LLC. For example, a C corporation can make
contributions towards life, accident, health, or other insurance deductibles and offer tax-free
benefits under a medical-expense reimbursement plan.
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Everything about Real Estate.
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complete financing information to succeed...
Five Insurance Policies Everyone Should
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Protecting your most important assets is an
important step in creating a solid personal
financial plan.
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Before You Invest, Before undertaking any
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Capital gains tax, Understanding Capital
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General Tax Information: TAX SAVING, TAX
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Make Your Financial Life Easier
FINANCE: THE BANKING AND THE AMERICAN
FINANCIAL SYSTEM HISTORY, SUCCESS
AND FAILURE
SAVING MONEY: THE SECRETS OF SAVING;
WAYS TO SAVE A LOT OF MONEY AND
GETTING RICHER
IRA / INDIVIDUAL RETIREMENT ACCOUNT.
What is an IRA? And what does it matter?
SOCIAL SECURITY; THE ULTIMATE
RETIREMENT GUIDE. HOW DOES SOCIAL
SECURITY WORK?
FINANCIAL REPORT: How to bring your
spending under control, so that you get the
most out of every dollar. 8 Reasons to get
pre-qualified for a mortgage loan!
ESTATE PLANNING: Estate planning, is it
really the process of accumulating and
disposing of an estate to maximize the goals
of the estate owner to avoid probate, to
lower the tax?
Assets Protection: Don't Get Sued: Five Tips
To Protect Your Company! Types of Asset-
Protection Vehicles;
Many different strategies have been
developed over the years claiming to protect
assets. How to protect yourself from...?
BUILDING WEALTH! How to Become Wealthy?
Nine Truths That Can Set You on the Path to
Financial Freedom
FINANCIAL KNOWLEDGE: The Successful
Investment Journey, Ten Tips For The
Successful Long-Term Investor
FINANCIAL SYSTEM: AMERICA’S MONEY
CRISIS / Bailout 101.
LEARN ABOUT: Top 6 Biggest U.S.
Government Financial Bailouts In History!
2-LEARN ABOUT MARKET CRASHES
HISTORY. HOW AND WHEN?
3-LEARN ABOUT: THE UNITED STATE, AND
THE WORLD MOST IMPORTANT FINANCIAL
INSTITUTIONS!
4-LEARN ABOUT THE COMPLETE FINANCIAL
TURMOIL, THE CREDIT CRISIS!
BANKING & FINANCE / Knowledge Financial.
com; an educational, a life changing website
with great ideas of small business, with
important things to know about our
economy, and investment
INVESTMENT: MAKE YOURSELF RICHER BY
INVESTING THE RIGHT WAY IN THE RIGHT
PRODUCTS. REAL ESTATE INVESTMENTS
CAN HELP
STOCK MARKET: STOCK MARKET A WAY TO
INVEST AND MULTIPLY YOUR PROFITS.
THESE INDUSTRIES HAS THOUSANDS OF
COMPANIES TO BUY STOCKS FROM.
FOREX MARKET: THE LARGEST MARKET IN
THE WORLD TO INVEST AND GET RICHER IF
YOU USE THE RIGHT TOOL.
TAX CERTIFICATES: / TAX DEED: A BETTER
WAY TO INVEST MONEY AND GET RICHER.
TAX LIENS: How Can You Safely Earn 18% to
240% Per Year On Your Investments? Yes
you can... By investing in Government
Issued Tax Liens, Tax deed, Tax Certificates.
REITs: REIT: Real Estate Investment Trust. A
GREAT WAY TO INVEST IN REAL ESTATE
WITHOUT TAKING A MORTGAGE LOAN
COMMERCIAL INVESTMENT. COMMERCIAL
REAL ESTATE; A BETTER WAY TO INVEST
AND GET RICHER! MULTI-WAYS TO WIN BIG
IN REAL ESTATE. WHAT IS COMMERCIAL
REAL ESTATE?
PENSION PLANS: THE ULTIMATE
RETIREMENT GUIDE; HOW TO RETIRE EARLY
AND RETIRE REACH. WHAT ARE 401K, ROTH
401K, INDIVIDUAL 401K, 403B, 457 PLAN,
THRIFT SAVINGS PLAN.
IDENTITY THEFT: WATCH OUT, STOP IT FROM
HAPPENING, GET THE TOOLS YOU NEED TO
PREVENT IT RIGHT HERE! AT KNOWLEDGE
FINANCIAL.COM
INSURANCE 101: THE IMPORTANCE OF
INSURANCE IN SOMEONE'S LIFE.
EVERYTHING YOU NEED TO KNOW ABOUT
INSURANCE; NOW IS YOUR CHANCE TO
KNOW HOW TO SAVE MONEY ON YOUR
INSURANCE! LEARN ABOUT THE 15
INSURANCE POLICIES YOU DON'T NEED!
MONEY, MAKE MONEY, AND GET OUT OF
DEBT!
PERSONAL FINANCE. What are you doing
with your money in the wake of the financial
crisis? --- Where is the safe place to put
money? My personal finance!
FINANCIAL FREEDOM: A SMARTEST WAY TO
PREPARE A BETTER FUTURE. Money-Making
Information You'll Need to Succeed
US ECONOMY, THE FINANCIAL SYSTEM, THE
CREDIT MARKET. WHAT'S GOING?
MONEY MANAGEMENT. Ten Resolutions to
Make Your Financial Life Easier
FINANCE: THE BANKING AND THE AMERICAN
FINANCIAL SYSTEM HISTORY, SUCCESS
AND FAILURE
SAVING MONEY: THE SECRETS OF SAVING;
WAYS TO SAVE A LOT OF MONEY AND
GETTING RICHER
IRA / INDIVIDUAL RETIREMENT ACCOUNT.
What is an IRA? And what does it matter?
SOCIAL SECURITY; THE ULTIMATE
RETIREMENT GUIDE. HOW DOES SOCIAL
SECURITY WORK?
FINANCIAL REPORT: How to bring your
spending under control, so that you get the
most out of every dollar. 8 Reasons to get
pre-qualified for a mortgage loan!
ESTATE PLANNING: Estate planning, is it
really the process of accumulating and
disposing of an estate to maximize the goals
of the estate owner to avoid probate, to
lower the tax?
Assets Protection: Don't Get Sued: Five Tips
To Protect Your Company! Types of Asset-
Protection Vehicles;
Many different strategies have been
developed over the years claiming to protect
assets. How to protect yourself from...?
BUILDING WEALTH! How to Become Wealthy?
Nine Truths That Can Set You on the Path to
Financial Freedom
FINANCIAL KNOWLEDGE: The Successful
Investment Journey, Ten Tips For The
Successful Long-Term Investor
FINANCIAL SYSTEM: AMERICA’S MONEY
CRISIS / Bailout 101.
LEARN ABOUT: Top 6 Biggest U.S.
Government Financial Bailouts In History!
2-LEARN ABOUT MARKET CRASHES
HISTORY. HOW AND WHEN?
3-LEARN ABOUT: THE UNITED STATE, AND
THE WORLD MOST IMPORTANT FINANCIAL
INSTITUTIONS!
4-LEARN ABOUT THE COMPLETE FINANCIAL
TURMOIL, THE CREDIT CRISIS!
BANKING & FINANCE / Knowledge Financial.
com; an educational, a life changing website
with great ideas of small business, with
important things to know about our
economy, and investment
INVESTMENT: MAKE YOURSELF RICHER BY
INVESTING THE RIGHT WAY IN THE RIGHT
PRODUCTS. REAL ESTATE INVESTMENTS
CAN HELP
STOCK MARKET: STOCK MARKET A WAY TO
INVEST AND MULTIPLY YOUR PROFITS.
THESE INDUSTRIES HAS THOUSANDS OF
COMPANIES TO BUY STOCKS FROM.
FOREX MARKET: THE LARGEST MARKET IN
THE WORLD TO INVEST AND GET RICHER IF
YOU USE THE RIGHT TOOL.
TAX CERTIFICATES: / TAX DEED: A BETTER
WAY TO INVEST MONEY AND GET RICHER.
TAX LIENS: How Can You Safely Earn 18% to
240% Per Year On Your Investments? Yes
you can... By investing in Government
Issued Tax Liens, Tax deed, Tax Certificates.
REITs: REIT: Real Estate Investment Trust. A
GREAT WAY TO INVEST IN REAL ESTATE
WITHOUT TAKING A MORTGAGE LOAN
COMMERCIAL INVESTMENT. COMMERCIAL
REAL ESTATE; A BETTER WAY TO INVEST
AND GET RICHER! MULTI-WAYS TO WIN BIG
IN REAL ESTATE. WHAT IS COMMERCIAL
REAL ESTATE?
PENSION PLANS: THE ULTIMATE
RETIREMENT GUIDE; HOW TO RETIRE EARLY
AND RETIRE REACH. WHAT ARE 401K, ROTH
401K, INDIVIDUAL 401K, 403B, 457 PLAN,
THRIFT SAVINGS PLAN.
IDENTITY THEFT: WATCH OUT, STOP IT FROM
HAPPENING, GET THE TOOLS YOU NEED TO
PREVENT IT RIGHT HERE! AT KNOWLEDGE
FINANCIAL.COM
INSURANCE 101: THE IMPORTANCE OF
INSURANCE IN SOMEONE'S LIFE.
EVERYTHING YOU NEED TO KNOW ABOUT
INSURANCE; NOW IS YOUR CHANCE TO
KNOW HOW TO SAVE MONEY ON YOUR
INSURANCE! LEARN ABOUT THE 15
INSURANCE POLICIES YOU DON'T NEED!
ATTENTION, ATTENTION!
IMPORTANT INFORMATION ABOUT THE
UNITED STATES FIVE [5] BIGGEST
FINANCIAL INSTITUTIONS...
Bank of America Financial Services
Wells Fargo Financial Services
PNC-National City Mortgage Financial
Services
Citibank,Citifinancial, Citimortgage,
Citigroup
JPMorgan-Chase Financial Services
How to make the Bank say, "Yes You're
Approved"
Learn here the most effective ways to
get the best loan rates, and the best
terms
IMPORTANT INFORMATION ABOUT THE
UNITED STATES FIVE [5] BIGGEST
FINANCIAL INSTITUTIONS...
Bank of America Financial Services
Wells Fargo Financial Services
PNC-National City Mortgage Financial
Services
Citibank,Citifinancial, Citimortgage,
Citigroup
JPMorgan-Chase Financial Services
How to make the Bank say, "Yes You're
Approved"
Learn here the most effective ways to
get the best loan rates, and the best
terms
CREDIT:--- CREDIT: SAVE YOUR CREDIT,
RESCUE IT, PROTECT IT, INCREASE YOUR
SCORE. WE HAVE VALUABLE INFORMATION
TO HELP YOU. LEARN MORE...
INVESTING:--- INVESMENT: METHOD AND
TECHNIQUES TO INVEST IN TODAY'S
MARKET FOR A BETTER TOMORROW!
CREDIT REPORT:--- Consumer Credit Report:
What's On It? Your Access to Free Credit
Reports. How do I get my free online Credit
Report?
SAVING MONEY:---SAVING MONEY
IMPORTANT TIPS... 66 WAYS TO SAVE
MONEY
CREDIT INFO:--- REVEAL GUARDED SECRETS
OF AMERICAN CREDIT
SYSTEM. Your credit has to do with
everything in life today. Credit Repair: Self
Help May Be Best.
MORTGAGE GENERAL INFORMATION:---
FLORIDA REAL ESTATE FINANCING &
REFINANCING, MORTGAGE HOME LOANS...
ID-THEFT--- HOW TO PROTECT AND DEFEND
YOURSELF AGAINST IDENTITY THEFT? -----
DETER, DETECT AND DEFEND?
REAL ESTATE INFORMATION CENTER:---
Information You'll Need to Succeed in Your
Real Estate Investments. MONEY MAKING
MACHINE REAL ESTATE INVESTMENT
OPPORTUNITIES FOR ALL!..
CREDIT CARDS:--- Six Smart Credit Card
Strategies. Have a questions about credit
cards? We have answers the top ten most
frequently asked credit card questions.
PROTECTION AGAINST IDENTITY THEFT:---
DEFEND YOURSELF AGAINST IDENTITY
THEFT; LEARN THE IMPORTANT METHODS
AND TECHNIQUES TO RECOVER FROM ID
THEFT!
CREDIT HELP:--- Understanding Your Debt
Collection Rights. LEARN THE REAL TRUTH
ABOUT CREDIT REPAIR! How to Use Your
Credit Clout: Credit Laws That are on Your
Side?
BANKING FINANCE Knowledge:--- The more
you know the closer you are to accomplish
great success.
CREDIT RATING:--- THE IMPORTANCE OF
YOUR CREDIT RATING. Tips to Improve or
Maintain a High Credit Score... Credit Card
Fraud: 21 Tips to Protect Yourself
TAXES:--- TAX KNOWLEDGE: MEANING TAX
SAVING, EQUAL
MORE MONEY FOR YOU! TAX SAVING,
TAX HELP: What to do if you Can’t Pay your
Tax Bill? How to Cut Your Property Taxes
GOVERNMENT:--- Government's general
information;
Local, State, and Federal, and Housing
Finance Authority of Miami dade, Monroe,
Broward, and Palm Beach County.
THE BLOG:--- WHERE AND HOW TO FIND
MONEY TO INVEST IN REAL ESTATE? THE
MOST LUCRATIVE, SECURED PROFITABLE
BUSINESS?
FINANCIAL HELP:--- FREE FINANCIAL
ADVICE. WAYS TO SAVE MONEY, TO MAKE
MONEY, AND GET OUT OF DEBT!
RESCUE IT, PROTECT IT, INCREASE YOUR
SCORE. WE HAVE VALUABLE INFORMATION
TO HELP YOU. LEARN MORE...
INVESTING:--- INVESMENT: METHOD AND
TECHNIQUES TO INVEST IN TODAY'S
MARKET FOR A BETTER TOMORROW!
CREDIT REPORT:--- Consumer Credit Report:
What's On It? Your Access to Free Credit
Reports. How do I get my free online Credit
Report?
SAVING MONEY:---SAVING MONEY
IMPORTANT TIPS... 66 WAYS TO SAVE
MONEY
CREDIT INFO:--- REVEAL GUARDED SECRETS
OF AMERICAN CREDIT
SYSTEM. Your credit has to do with
everything in life today. Credit Repair: Self
Help May Be Best.
MORTGAGE GENERAL INFORMATION:---
FLORIDA REAL ESTATE FINANCING &
REFINANCING, MORTGAGE HOME LOANS...
ID-THEFT--- HOW TO PROTECT AND DEFEND
YOURSELF AGAINST IDENTITY THEFT? -----
DETER, DETECT AND DEFEND?
REAL ESTATE INFORMATION CENTER:---
Information You'll Need to Succeed in Your
Real Estate Investments. MONEY MAKING
MACHINE REAL ESTATE INVESTMENT
OPPORTUNITIES FOR ALL!..
CREDIT CARDS:--- Six Smart Credit Card
Strategies. Have a questions about credit
cards? We have answers the top ten most
frequently asked credit card questions.
PROTECTION AGAINST IDENTITY THEFT:---
DEFEND YOURSELF AGAINST IDENTITY
THEFT; LEARN THE IMPORTANT METHODS
AND TECHNIQUES TO RECOVER FROM ID
THEFT!
CREDIT HELP:--- Understanding Your Debt
Collection Rights. LEARN THE REAL TRUTH
ABOUT CREDIT REPAIR! How to Use Your
Credit Clout: Credit Laws That are on Your
Side?
BANKING FINANCE Knowledge:--- The more
you know the closer you are to accomplish
great success.
CREDIT RATING:--- THE IMPORTANCE OF
YOUR CREDIT RATING. Tips to Improve or
Maintain a High Credit Score... Credit Card
Fraud: 21 Tips to Protect Yourself
TAXES:--- TAX KNOWLEDGE: MEANING TAX
SAVING, EQUAL
MORE MONEY FOR YOU! TAX SAVING,
TAX HELP: What to do if you Can’t Pay your
Tax Bill? How to Cut Your Property Taxes
GOVERNMENT:--- Government's general
information;
Local, State, and Federal, and Housing
Finance Authority of Miami dade, Monroe,
Broward, and Palm Beach County.
THE BLOG:--- WHERE AND HOW TO FIND
MONEY TO INVEST IN REAL ESTATE? THE
MOST LUCRATIVE, SECURED PROFITABLE
BUSINESS?
FINANCIAL HELP:--- FREE FINANCIAL
ADVICE. WAYS TO SAVE MONEY, TO MAKE
MONEY, AND GET OUT OF DEBT!
WELCOME TO:
KNOWLEDGEFINANCIAL.COM
KNOWLEDGEFINANCIAL.COM
| THE FUNDAMENTAL OF TAXES--- PART ONE Type of business entities Most people earn money, pay taxes through withholding, and spend what little is left over. The rich do it differently. They earn money, spend it, and then pay taxes. The government gets less that way, and it’s legal. Employees of corporations: Earn → pay taxes → spend The rich who have corporations: Earn → spend → pay taxes What is the secret of the rich? They take advantage of the tax loopholes that allow individuals to choose different entities for their businesses. Loopholes, though they may have a negative connotation for some, are intended to help businesses grow and prosper. The tax law allows a corporation, for example, to earn, spend everything it can on legitimate business expenses, and then be taxed only on what remains. How can you get in on this secret? First by learning what business entities are available to you and what the advantages and disadvantages are of each. These entities include the sole proprietorship, the partnership, the corporation, and the limited-liability company, which is a hybrid partnership/corporation. KNOWLEDGE FINANCIAL'S Tip “You can’t beat the IRS. Concentrate instead on earning as much as you can, knowing that you can reduce, but not eliminate, your tax burden.” In the Rich Dad program, it is important that you be aware of the various entity choices and their primary attributes. Consult your legal and tax advisors about what entity may be most appropriate for you and your intended business, whether it is real estate, a purchased business, or a start-up. FEAR: My hard-earned profits will disappear in the black hole of the IRS. FACT: There are business entities available that may help counteract your tax burden. By consulting with your tax and legal advisors, you can structure your business in such a way as to maximize your tax deductions. FREEDOM: If you structure your business properly, you can protect more of your profits. “It’s a game. We (tax lawyers) teach the rich how to play it so they can stay rich—and the IRS keeps changing the rules so we can keep getting rich teaching them.” —John Grisham Sole Proprietorship This is the oldest and simplest form of business. The owner and the business are one and the same, enjoying all the benefits but assuming all the debts and tax responsibilities. Only one person is required to form a sole proprietorship, and since there is legally no difference between the owner and the business, all income generated by the business is regarded as personal income. The owner reports all business income and losses on a personal tax return (Schedule C) and is allowed to deduct business expenses. The owner is also personally liable for the business and can be sued by an unhappy customer or unpaid creditor. If business assets cannot satisfy such a claim, the owner’s house, car, and other personal assets are vulnerable. Sole Proprietorship Pros Cons Owner in complete control Owner completely liable for debts and suits Flexible decision making Business terminates with owner’s death Business expenses deductible Tax rate may be higher than other entities Owner earns all profits Easy and inexpensive to set up |
-- SOUTH FLORIDA REAL ESTATE
INVESTMENTS. ---
FIVE IMPORTANT THINGS EVERY REAL
ESTATE INVESTOR SHOULD KNOW
ABOUT?... ATTENTION, ATTENTION
HOME-BUYERS AND SELLERS...
--- REAL ESTATE INVESTMENTS: WHY
INVESTING IN REAL ESTATE TODAY IS A
GOOD IDEA FOR FIRST TIME HOME-
BUYERS AND FOR EVERYONE?
---... Federal Housing Administration
{FHA} Mortgage Loan Programs
Information Center. Help for America's
Homeowners! How to make your home
affordable?
--- ...REAL ESTATE ADVANTAGE AND
GREAT OPPORTUNITY FOR FIRST TIME
HOME-BUYERS IN SOUTH FLORIDA!
———
-- FIRST TIME HOME-BUYERS.
METHODS, TECHNIQUES, AND
STRATEGIES TO SUCCEED -- THE MOST
IMPORTANT INFORMATION FOR FIRST
TIME BUYERS...
--- INVESTMENT GENERAL KNOWLEDGE
AND FINANCING STRATEGY...
INVEST NOW AND GET RICHER LATER.
INVEST YOUR MONEY TODAY AND GET
RICHER TOMORROW
--- REAL ESTATE FINANCING: WHERE
AND HOW TO FIND MONEY TO INVEST
IN REAL ESTATE?
Bringing the Dream of Home-
ownership Within Reach... THE DREAM
NOW CAN BECOME A REALITY.
--- SOUTH FLORIDA REAL ESTATE
INVESTMENTS. ---
FIVE IMPORTANT THINGS EVERY REAL
ESTATE INVESTOR SHOULD KNOW
ABOUT?... ATTENTION, ATTENTION
HOME-BUYERS AND SELLERS...
--- NSP --- Neighborhood Stabilization
Program
Neighborhood Stabilization Program:
HUD's new Neighborhood Stabilization
Program provides emergency
assistance to state and local
governments to...
---... HOME-BUYER'S TAX CREDIT,
ASSISTANCE WITH DOWN-PAYMENT
AND CLOSING COST. {FLHOP} FLORIDA
HOUSING OPPORTUNITY PROGRAM.
Utilizing home buyer tax credit to
assist at closing
--- What are the advantages of
commercial property investment?
--- REAL ESTATE ADVANTAGE AND
GREAT OPPORTUNITY FOR EVERYONE.
LEARN MORE...
--- How to Step Up and Build Wealth by
Investing in Commercial Real Estate?
INVESTMENTS. ---
FIVE IMPORTANT THINGS EVERY REAL
ESTATE INVESTOR SHOULD KNOW
ABOUT?... ATTENTION, ATTENTION
HOME-BUYERS AND SELLERS...
--- REAL ESTATE INVESTMENTS: WHY
INVESTING IN REAL ESTATE TODAY IS A
GOOD IDEA FOR FIRST TIME HOME-
BUYERS AND FOR EVERYONE?
---... Federal Housing Administration
{FHA} Mortgage Loan Programs
Information Center. Help for America's
Homeowners! How to make your home
affordable?
--- ...REAL ESTATE ADVANTAGE AND
GREAT OPPORTUNITY FOR FIRST TIME
HOME-BUYERS IN SOUTH FLORIDA!
———
-- FIRST TIME HOME-BUYERS.
METHODS, TECHNIQUES, AND
STRATEGIES TO SUCCEED -- THE MOST
IMPORTANT INFORMATION FOR FIRST
TIME BUYERS...
--- INVESTMENT GENERAL KNOWLEDGE
AND FINANCING STRATEGY...
INVEST NOW AND GET RICHER LATER.
INVEST YOUR MONEY TODAY AND GET
RICHER TOMORROW
--- REAL ESTATE FINANCING: WHERE
AND HOW TO FIND MONEY TO INVEST
IN REAL ESTATE?
Bringing the Dream of Home-
ownership Within Reach... THE DREAM
NOW CAN BECOME A REALITY.
--- SOUTH FLORIDA REAL ESTATE
INVESTMENTS. ---
FIVE IMPORTANT THINGS EVERY REAL
ESTATE INVESTOR SHOULD KNOW
ABOUT?... ATTENTION, ATTENTION
HOME-BUYERS AND SELLERS...
--- NSP --- Neighborhood Stabilization
Program
Neighborhood Stabilization Program:
HUD's new Neighborhood Stabilization
Program provides emergency
assistance to state and local
governments to...
---... HOME-BUYER'S TAX CREDIT,
ASSISTANCE WITH DOWN-PAYMENT
AND CLOSING COST. {FLHOP} FLORIDA
HOUSING OPPORTUNITY PROGRAM.
Utilizing home buyer tax credit to
assist at closing
--- What are the advantages of
commercial property investment?
--- REAL ESTATE ADVANTAGE AND
GREAT OPPORTUNITY FOR EVERYONE.
LEARN MORE...
--- How to Step Up and Build Wealth by
Investing in Commercial Real Estate?
TAXES: THE FUNDAMENTAL OF TAXES. THE MORE YOU KNOW, THE LESS YOU PAY. Corporation can provide certain
benefits not available to other entities.
benefits not available to other entities.
How not to pay taxes on Real Estate?
1031 Exchange... CLICK HERE
What to do if you Can’t Pay your Tax
Bill? How to Cut Your Property Taxes
TAX CERTIFICATE / TAX DEED: A BETTER
WAY TO INVEST MONEY AND GET
RICHER
Tax strategies, Tax advantage, Tax
advice for all. HOW TO REDUCE YOUR
TAXES TO GET MAXIMUM RETURN
FROM THE I.R.S.?
TAXES: THE FUNDAMENTAL OF TAXES.
THE MORE YOU KNOW, THE LESS YOU
PAY. Corporation can provide certain
benefits not available to other entities.
What's New for Tax Savings?
Here are the tax law changes you need
to know to get more money from uncle
Sam..
TAX LIENS: ---Investing in Government
Issued Tax Lien Certificates! Do you
ever wonder what would happen if you
don't pay your property taxes? Can You
Safely Earn 18% or more Per Year On
Your Investments?
Education Tax Credit, Tax Saving, Tax
Reduction, Tax Benefits. How to
Maximize Your Tax Deductions
Ten Top Tax Tips!
TAX SAVING TIPS FOR INDIVIDUAL
INVESTOR, AND LANDLORDS; The More
You Know, the Less You’ll Pay. CLICK
HERE!
1031 Exchange... CLICK HERE
What to do if you Can’t Pay your Tax
Bill? How to Cut Your Property Taxes
TAX CERTIFICATE / TAX DEED: A BETTER
WAY TO INVEST MONEY AND GET
RICHER
Tax strategies, Tax advantage, Tax
advice for all. HOW TO REDUCE YOUR
TAXES TO GET MAXIMUM RETURN
FROM THE I.R.S.?
TAXES: THE FUNDAMENTAL OF TAXES.
THE MORE YOU KNOW, THE LESS YOU
PAY. Corporation can provide certain
benefits not available to other entities.
What's New for Tax Savings?
Here are the tax law changes you need
to know to get more money from uncle
Sam..
TAX LIENS: ---Investing in Government
Issued Tax Lien Certificates! Do you
ever wonder what would happen if you
don't pay your property taxes? Can You
Safely Earn 18% or more Per Year On
Your Investments?
Education Tax Credit, Tax Saving, Tax
Reduction, Tax Benefits. How to
Maximize Your Tax Deductions
Ten Top Tax Tips!
TAX SAVING TIPS FOR INDIVIDUAL
INVESTOR, AND LANDLORDS; The More
You Know, the Less You’ll Pay. CLICK
HERE!
..RICH GUIDE, WHY AREN'T RICH?
BUILDING FINANCIAL WEALTH, OBTAIN
FINANCIAL FREEDOM, BECOME A RICH
PERSON; YES YOU CAN...
..RULE OF 72: The compound interest and
financial success. Rule Of 72 is the most
important and simple rule of financial
success.
..MILLIONAIRE: How To Make Your First $1
Million? The Millionaire's Mindset
..FORTUNE: BEFORE INVESTING IN THE
STOCK MARKET LEARN THIS FIRST!...
..GOVERNMENT: Government's general
information; Local, State, and Federal.
Housing Finance Authority of Miami dade,
Monroe, Broward, and Palm Beach County
..EMPIRE: THE ABC's OF INVESTMENTS,
Ways to Save. THE TRIANGLE OF
SUCCESS...
..INVESTORS: CREATIVE FINANCING:
TOP 10 CREATIVE FINANCING
TECHNIQUES AND STRATEGIES TO FIND
MONEY TO INVEST!
The Five C’s of Credit: LEARN MORE..
CREATIVE FINANCE CAN AND WILL MAKE
ALL THE DIFFERENCE WHEN AN INVESTOR
DECIDES TO INVEST IN REAL ESTATE...
..HOME INSPECTION: HOW TO GET THE
BEST OUT OF IT..
Top 10 home-buying mistakes to avoid!
HOW TO USE HOME INSPECTION
REPORTS TO NEGOTIATE SALE PRICE?...
...ACCOUNTING: The Basics of
Accounting...
...TAXES: THE FUNDAMENTAL OF TAXES.
THE MORE YOU KNOW, THE LESS YOU
PAY...
...ANALYTICS: Top 9 Real Estate Financial
Calculator Problems every investors
should know about...
...REAL ESTATE MARKET:
TODAY'S GREAT DEALS
FOR FIRST-TIME HOME-
BUYERS & FOR
EVERYONE AS NEVER
SEEN BEFORE!
WONDERFUL
OPPORTUNITY TO
CREATE TREMENDOUS
AMOUNT OF WEALTH...
BUILDING FINANCIAL WEALTH, OBTAIN
FINANCIAL FREEDOM, BECOME A RICH
PERSON; YES YOU CAN...
..RULE OF 72: The compound interest and
financial success. Rule Of 72 is the most
important and simple rule of financial
success.
..MILLIONAIRE: How To Make Your First $1
Million? The Millionaire's Mindset
..FORTUNE: BEFORE INVESTING IN THE
STOCK MARKET LEARN THIS FIRST!...
..GOVERNMENT: Government's general
information; Local, State, and Federal.
Housing Finance Authority of Miami dade,
Monroe, Broward, and Palm Beach County
..EMPIRE: THE ABC's OF INVESTMENTS,
Ways to Save. THE TRIANGLE OF
SUCCESS...
..INVESTORS: CREATIVE FINANCING:
TOP 10 CREATIVE FINANCING
TECHNIQUES AND STRATEGIES TO FIND
MONEY TO INVEST!
The Five C’s of Credit: LEARN MORE..
CREATIVE FINANCE CAN AND WILL MAKE
ALL THE DIFFERENCE WHEN AN INVESTOR
DECIDES TO INVEST IN REAL ESTATE...
..HOME INSPECTION: HOW TO GET THE
BEST OUT OF IT..
Top 10 home-buying mistakes to avoid!
HOW TO USE HOME INSPECTION
REPORTS TO NEGOTIATE SALE PRICE?...
...ACCOUNTING: The Basics of
Accounting...
...TAXES: THE FUNDAMENTAL OF TAXES.
THE MORE YOU KNOW, THE LESS YOU
PAY...
...ANALYTICS: Top 9 Real Estate Financial
Calculator Problems every investors
should know about...
...REAL ESTATE MARKET:
TODAY'S GREAT DEALS
FOR FIRST-TIME HOME-
BUYERS & FOR
EVERYONE AS NEVER
SEEN BEFORE!
WONDERFUL
OPPORTUNITY TO
CREATE TREMENDOUS
AMOUNT OF WEALTH...
| BUILDING WEALTH RICH GUIDE: WHY AREN'T YOU RICH? BUILDING FINANCIAL WEALTH, OBTAIN FINANCIAL FREEDOM, BECOME A RICH PERSON; YES YOU CAN... Learn More! Financial Education - Financial Knowledge Everything You Need To Know About Finance. Dubai- The World Largest, Biggest, Tallest, Greatest of Almost Everything. Learn more about this magnificent place and as well as other countries. COPYRIGHT-- What is Copyright? The Basics About Copyright Registration. The procedure for copyright registration. Do I need copyright protection? How do I register? Learn More! |
| BUILDING WEALTH RICH GUIDE: WHY AREN'T YOU RICH? BUILDING FINANCIAL WEALTH, OBTAIN FINANCIAL FREEDOM, BECOME A RICH PERSON; YES YOU CAN... Learn More! Financial Education - Financial Knowledge Everything You Need To Know About Finance. Dubai- The World Largest, Biggest, Tallest, Greatest of Almost Everything. Learn more about this magnificent place and as well as other countries. COPYRIGHT-- What is Copyright? The Basics About Copyright Registration. The procedure for copyright registration. Do I need copyright protection? How do I register? Learn More! |
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9 - ABSOLUTE Tax Moves in 2010 EVERYBODY SHOULD KNOW ABOUT!
Tip 1: Watch Out for Making Work Pay Complications --- 2010 --------knowledgefinancial.com
To get more money into taxpayers' hands, the American Recovery and Reinvestment Act included a new tax break, the Making Work Pay credit. Rather than
being a separate rebate check, this credit started showing up in worker paychecks last April. By the end of 2009, eligible employees received an extra $400.
Some workers, however, got more than they should have. This happened, for example, when a worker had two jobs. The new withholding rates meant that
employee got $400 at each job, or twice the allowable credit amount. Similarly, a husband and wife who each had jobs could have received excess credit.
This filing season, taxpayers will have to fill out the new Schedule M to reconcile any credit overages. You might want to fill out the form early to see just what
kind of tax damage you might face.
If you did encounter a Making Work Pay problem in 2009, consider adjusting your withholding early in 2010.
Now about that 2010 payout. Even if you don't make any W-4 changes, you'll see more tax withheld from your paychecks than was taken out after the Making
Work Pay credit went into effect last year. When the credit took effect, the full $400 amount was paid out over just the last nine months of the year. But with the
credit being paid out over all 12 months of 2010, this year's per-paycheck bump will be smaller.
Tip 2: Convert Your Traditional IRA to a Roth --------knowledgefinancial.com
With the arrival of 2010, anyone can now convert a traditional IRA to a Roth retirement account. Before, shifting tax-deferred traditional IRA money into a tax-free
Roth plan was not available to folks with adjusted gross income of $100,000 or more. That income limit has been removed.
If you decide this is the right retirement move for you, note that you will have to pay taxes on the previously untaxed amounts you convert. The good news is you
can opt to pay half the conversion costs on your 2011 taxes, with the remainder in 2012.
Tip 3: Improve Your Home's Energy Efficiency
Thanks to another portion of last year's stimulus bill, the tax savings for energy-efficient home improvements were themselves improved.
Instead of a complicated patchwork of credit amounts, homeowners can claim up to 30 percent of the first $5,000 spent on qualifying residential energy
upgrades, or up to $1,500 in tax credits. If you want to go even greener, for example by installing a solar home heating system, you could get even bigger tax
credits.
The new credit format took effect last year, but is running through 2010. This might be the last year, though, so if you need to make home repairs, consider
energy-efficient upgrades that could pay off at tax-filing time.
Tip 4: Hit the Road in a Hybrid
Gas prices stabilized over the last year, but there's no guarantee they won't once again nudge the $4 mark. If you're concerned about it, consider a hybrid. Even
better, these cars could pay off at tax time.
However, you have to shop carefully. The hybrid credit, which is available through 2010, was designed to phase out once an automaker sold 60,000 eligible
vehicles. That happened years ago with popular Toyota and Honda hybrids. Other auto manufacturers, however, still offer an array of fuel-efficient cars, trucks
and SUVs that could save you tax dollars.
Tip 5: Hire an Estate Tax Attorney -------knowledgefinancial.com
The estate tax died as scheduled in 2010, but look for a retroactive resurrection this year. Congress effectively has until September to approve a new law since
estate tax returns aren't due until nine months after a taxpayer dies. Most lawmakers agree that a tax should be in place. The question is: How much of an
estate's assets should be exempted? The congressional re-examination of the estate tax highlights how estate planning can be complex, confusing and costly.
Don't follow Congress' bad example and put off dealing with your estate and potential tax ramifications. See an estate tax professional and get your affairs in
order sooner rather than later so that your heirs, not the IRS, are your ultimate beneficiaries.
Tip 6: Remember That RMDs Are Back
Tax-deferred savings plans such as traditional IRAs or workplace 401(k)s are great ways to build a retirement nest egg. But the IRS won't wait for its cut of the
account earnings forever. Once you turn 70-1/2, tax law demands you start taking money out of these accounts via required minimum distributions, or RMDs.
In 2009, retirees didn't have to worry about RMDs thanks to a one-year waiver granted by Congress. In 2010, RMDs are back, so make sure you take out the
requisite money or you could pay a stiff penalty.
Tip 7: Cash in on Low Capital Gains Rates ----KNOWLEDGEFINANCIAL.COM
The Bush administration tax cuts included reductions in capital gains tax rates based on taxpayer adjusted gross income. Currently, the highest rate is 15
percent for individuals in the 25 percent to 35 percent tax brackets. Taxpayers in the 10 percent and 15 percent tax brackets pay no capital
gains.------knowledgefinancial.com
That's scheduled to change in 2011. The top rate will return to 20 percent; the zero rate will revert to 10 percent. There's always a chance Congress could
continue the current lower rates, but with the federal deficit, the top capital gains rate is likely to increase. If you are in a higher income bracket and could
eventually face higher capital gains taxes, speak with your tax and investment advisers about whether cashing in now at the lower rates fits your portfolio plans.
Tip 8: Be Aware of Rising Income Tax Rates
Similarly, several other Bush administration tax cuts are set to expire at the end of 2010. As for income taxes, the top tax rate is scheduled to return to 39.6
percent from the current 35 percent and the 10 percent bracket would be eliminated.
Will this happen? Right now, it looks as if the 10 percent bracket is safe, but higher-income individuals might be facing increased taxes in 2011. If you could be
affected, talk with your tax and financial advisers about what steps you can take to soften the tax blow.
There has been some talk that growing deficits could prompt rate hikes ahead of schedule. However, a still-sluggish economy and upcoming 2010 midterm
elections make that less likely. So pay attention to Congress and to Bankrate for the latest on where personal income tax rates might go.
Tip 9: Keep an Eye on Health Care
President Barack Obama had hoped that health care reform would be resolved by now. But look for this debate to continue into the early part of 2010. If or when
lawmakers reach an agreement, you'll need to pay attention to what modifications might take effect.
Many changes, such as an increase in the amount of medical expenses necessary to deduct them, wouldn't show up for several years. Others, however, are on
a fast track. For example, the proposal to limit flexible spending account contributions to $2,500 a year would take effect in 2011. If that change comes to pass,
you'll need to account for it in 2010 as you make decisions about your company health care benefits.
KNOWLEDGEFINANCIAL.COM
Tip 1: Watch Out for Making Work Pay Complications --- 2010 --------knowledgefinancial.com
To get more money into taxpayers' hands, the American Recovery and Reinvestment Act included a new tax break, the Making Work Pay credit. Rather than
being a separate rebate check, this credit started showing up in worker paychecks last April. By the end of 2009, eligible employees received an extra $400.
Some workers, however, got more than they should have. This happened, for example, when a worker had two jobs. The new withholding rates meant that
employee got $400 at each job, or twice the allowable credit amount. Similarly, a husband and wife who each had jobs could have received excess credit.
This filing season, taxpayers will have to fill out the new Schedule M to reconcile any credit overages. You might want to fill out the form early to see just what
kind of tax damage you might face.
If you did encounter a Making Work Pay problem in 2009, consider adjusting your withholding early in 2010.
Now about that 2010 payout. Even if you don't make any W-4 changes, you'll see more tax withheld from your paychecks than was taken out after the Making
Work Pay credit went into effect last year. When the credit took effect, the full $400 amount was paid out over just the last nine months of the year. But with the
credit being paid out over all 12 months of 2010, this year's per-paycheck bump will be smaller.
Tip 2: Convert Your Traditional IRA to a Roth --------knowledgefinancial.com
With the arrival of 2010, anyone can now convert a traditional IRA to a Roth retirement account. Before, shifting tax-deferred traditional IRA money into a tax-free
Roth plan was not available to folks with adjusted gross income of $100,000 or more. That income limit has been removed.
If you decide this is the right retirement move for you, note that you will have to pay taxes on the previously untaxed amounts you convert. The good news is you
can opt to pay half the conversion costs on your 2011 taxes, with the remainder in 2012.
Tip 3: Improve Your Home's Energy Efficiency
Thanks to another portion of last year's stimulus bill, the tax savings for energy-efficient home improvements were themselves improved.
Instead of a complicated patchwork of credit amounts, homeowners can claim up to 30 percent of the first $5,000 spent on qualifying residential energy
upgrades, or up to $1,500 in tax credits. If you want to go even greener, for example by installing a solar home heating system, you could get even bigger tax
credits.
The new credit format took effect last year, but is running through 2010. This might be the last year, though, so if you need to make home repairs, consider
energy-efficient upgrades that could pay off at tax-filing time.
Tip 4: Hit the Road in a Hybrid
Gas prices stabilized over the last year, but there's no guarantee they won't once again nudge the $4 mark. If you're concerned about it, consider a hybrid. Even
better, these cars could pay off at tax time.
However, you have to shop carefully. The hybrid credit, which is available through 2010, was designed to phase out once an automaker sold 60,000 eligible
vehicles. That happened years ago with popular Toyota and Honda hybrids. Other auto manufacturers, however, still offer an array of fuel-efficient cars, trucks
and SUVs that could save you tax dollars.
Tip 5: Hire an Estate Tax Attorney -------knowledgefinancial.com
The estate tax died as scheduled in 2010, but look for a retroactive resurrection this year. Congress effectively has until September to approve a new law since
estate tax returns aren't due until nine months after a taxpayer dies. Most lawmakers agree that a tax should be in place. The question is: How much of an
estate's assets should be exempted? The congressional re-examination of the estate tax highlights how estate planning can be complex, confusing and costly.
Don't follow Congress' bad example and put off dealing with your estate and potential tax ramifications. See an estate tax professional and get your affairs in
order sooner rather than later so that your heirs, not the IRS, are your ultimate beneficiaries.
Tip 6: Remember That RMDs Are Back
Tax-deferred savings plans such as traditional IRAs or workplace 401(k)s are great ways to build a retirement nest egg. But the IRS won't wait for its cut of the
account earnings forever. Once you turn 70-1/2, tax law demands you start taking money out of these accounts via required minimum distributions, or RMDs.
In 2009, retirees didn't have to worry about RMDs thanks to a one-year waiver granted by Congress. In 2010, RMDs are back, so make sure you take out the
requisite money or you could pay a stiff penalty.
Tip 7: Cash in on Low Capital Gains Rates ----KNOWLEDGEFINANCIAL.COM
The Bush administration tax cuts included reductions in capital gains tax rates based on taxpayer adjusted gross income. Currently, the highest rate is 15
percent for individuals in the 25 percent to 35 percent tax brackets. Taxpayers in the 10 percent and 15 percent tax brackets pay no capital
gains.------knowledgefinancial.com
That's scheduled to change in 2011. The top rate will return to 20 percent; the zero rate will revert to 10 percent. There's always a chance Congress could
continue the current lower rates, but with the federal deficit, the top capital gains rate is likely to increase. If you are in a higher income bracket and could
eventually face higher capital gains taxes, speak with your tax and investment advisers about whether cashing in now at the lower rates fits your portfolio plans.
Tip 8: Be Aware of Rising Income Tax Rates
Similarly, several other Bush administration tax cuts are set to expire at the end of 2010. As for income taxes, the top tax rate is scheduled to return to 39.6
percent from the current 35 percent and the 10 percent bracket would be eliminated.
Will this happen? Right now, it looks as if the 10 percent bracket is safe, but higher-income individuals might be facing increased taxes in 2011. If you could be
affected, talk with your tax and financial advisers about what steps you can take to soften the tax blow.
There has been some talk that growing deficits could prompt rate hikes ahead of schedule. However, a still-sluggish economy and upcoming 2010 midterm
elections make that less likely. So pay attention to Congress and to Bankrate for the latest on where personal income tax rates might go.
Tip 9: Keep an Eye on Health Care
President Barack Obama had hoped that health care reform would be resolved by now. But look for this debate to continue into the early part of 2010. If or when
lawmakers reach an agreement, you'll need to pay attention to what modifications might take effect.
Many changes, such as an increase in the amount of medical expenses necessary to deduct them, wouldn't show up for several years. Others, however, are on
a fast track. For example, the proposal to limit flexible spending account contributions to $2,500 a year would take effect in 2011. If that change comes to pass,
you'll need to account for it in 2010 as you make decisions about your company health care benefits.
KNOWLEDGEFINANCIAL.COM
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Professionals-
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SAVING YOU MUST KNOW ABOUT.
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YOU KNOW, THE LESS YOU PAY.
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Tax Breaks That Anyone Can Claim--
Rapid Refund-
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Professionals-
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SAVING YOU MUST KNOW ABOUT.
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YOU KNOW, THE LESS YOU PAY.
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Tax Breaks That Anyone Can Claim--
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Tax Deal of 2010-2012: What's in It for You?
Tax Deal: What's in It for You?
Your tax rates won't go up next year and for most, a bigger
paycheck
American taxpayers can breathe a sigh of relief -- for now.
After months of uncertainty, it’s now guaranteed that federal
income-tax rates will remain at the same level for two more
years.
Most working Americans will see their paychecks increase
in January thanks to a temporary reduction in payroll taxes,
and the long-term unemployed can count on continued
jobless benefits through 2011.
After a failed attempt to reshape the federal estate-tax
provision that the Democratic leadership considered a
giveaway to the wealthy, the House approved a massive tax
package 277 to 148.
The Senate approved an identical measure on Wednesday
by an 81 to 19 margin. President Barack Obama signed the
bill into law on Friday November 17, 2010.
Stable Rates on Investment Income
Starting in 2011. But now that it’s clear that tax rates will
remain the same through 2012, it’s back to year-end tax
planning as usual: defer income, such as bonuses, into
next year when possible and accelerate deductions into the
current year to minimize your taxable income.
Tax rates on long-term capital gains and qualified dividends
will remain at a maximum 15% through 2012, and those in
the two lowest income-tax brackets -- 10% and 15% -- will
continue to enjoy a 0% capital-gains rate.
Bigger Paychecks for Most
One of the major elements of the tax package is a one-year
reduction in the payroll tax that funds Social Security. FICA
taxes will drop from 6.2% to 4.2% for most workers. Since
the tax applies to up to $106,800 in 2011, the tax cut is worth
as much as $2,136 for a worker or $4,272 for a working
couple.
(The self-employed will pay 10.4% on income up to the cap,
down from 12.4% in 2010.) The 1.45% portion of payroll
taxes that funds Medicare will continue to apply to all
earnings with no cap.
But not everyone will benefit from the payroll-tax holiday.
Workers who do not participate in the Social Security
system, such as some public-school teachers and many
civil servants, will see no reduction in their payroll taxes. And
some federal employees will get hit with a double whammy:
no break on payroll taxes and a wage freeze next year.
Some lower-income workers may also feel as if Santa left
them a lump of coal in their stocking. Although they will
benefit from the lower payroll tax, the tax break will not be as
generous as the Making Work Pay credit that reduced their
taxes by up to $400 for individuals and up to $800 for
married couples in 2010 (subject to income limits).
No Cap on Exemptions, Deductions
Upper-income taxpayers will also benefit from no limit on
their itemized deductions and the personal exemptions that
they claim for themselves, their spouse and dependents. In
the past, those tax benefits were reduced above certain
income levels. Caps on both deductions and personal
exemptions were eliminated for 2010, and the legislative
package extends those valuable tax breaks through 2012.
Middle Class Dodge the AMT
The compromise tax package boosts the exemption levels
for the alternative minimum tax, protecting more than 20
million middle-income taxpayers from being snagged by the
parallel tax system that disallows most tax deductions and
exemptions. The AMT, designed 40 years ago to ensure that
the loophole-savvy wealthy paid at least some taxes, has
never been indexed for inflation. So over the decades, the
AMT has morphed from a class tax into a mass tax,
prompting Congress to approve temporary patches each
year to lift the AMT exemption level and spare millions of
middle-class taxpayers from becoming unintended victims
of the stealth tax. The package increases the AMT
exemption levels for 2010 and 2011.
More Breaks for Education Costs
The popular American Opportunity tax credit, worth up to
$2,500 to offset the high cost of college, was scheduled to
expire at the end of 2010. Now it has been extended through
2012. The full credit, which reduces your tax bill dollar-for-
dollar, is available to individuals with incomes of up to
$80,000 and married couples with joint income of up to
$160,000. The credit phases out above those income
levels, disappearing at $90,000 for individuals and
$180,000 for married couples.
The tax package also extends more-generous contribution
levels and qualified tax-free distributions for Coverdell
Education Savings Accounts, which can be used to fund
elementary- and secondary-school expenses in addition to
college costs.
Maximum contribution levels had been slated to drop from
$2,000 to $500 per year beginning in 2011, and tax-free
distribution would have been limited to college expenses.
The package extends existing funding and distribution rules
through 2012.
Two-Year Reprieves
A host of other popular tax breaks that had expired at the
end of 2009 have been reinstated for 2010 and 2011. You’ll
appreciate them when you file your taxes next spring. They
include:
• a choice between deducting state sales taxes or state
income taxes;
• a tax deduction of up to $4,000 for college tuition costs
available to some taxpayers whose incomes are too high to
qualify for the American Opportunity credit;
• a deduction of up to $250 that teachers can claim for our-
of-pocket expenses for classroom supplies, even if they don’
t itemize their deductions;
• and the ability of taxpayers who are age 70½ or older to
donate up to $100,000 of their IRAs directly to a charity and
exclude the amount of their donation from their taxable
income.
More-Generous Estate Tax
The most controversial element of the tax package is a
reinstatement of the federal estate tax, which had
temporarily disappeared in 2010, with a higher exemption
level and a lower rate than in the past.
Beginning in 2011, estates valued at $5 million or less ($10
million or less for married couples) will escape the federal
estate tax completely, and estates above those thresholds
would be taxed at a 35% rate.
House Democrats, who had been excluded from
negotiations on the package, railed against the deal, which
they claimed is a giveaway to the rich. But in the end, they
failed in efforts to ratchet down the exemption to the $3.5
million level that had been in effect in 2009 before the estate
tax expired and to increase the tax rate to 45%.
Tax Deal: What's in It for You?
Your tax rates won't go up next year and for most, a bigger
paycheck
American taxpayers can breathe a sigh of relief -- for now.
After months of uncertainty, it’s now guaranteed that federal
income-tax rates will remain at the same level for two more
years.
Most working Americans will see their paychecks increase
in January thanks to a temporary reduction in payroll taxes,
and the long-term unemployed can count on continued
jobless benefits through 2011.
After a failed attempt to reshape the federal estate-tax
provision that the Democratic leadership considered a
giveaway to the wealthy, the House approved a massive tax
package 277 to 148.
The Senate approved an identical measure on Wednesday
by an 81 to 19 margin. President Barack Obama signed the
bill into law on Friday November 17, 2010.
Stable Rates on Investment Income
Starting in 2011. But now that it’s clear that tax rates will
remain the same through 2012, it’s back to year-end tax
planning as usual: defer income, such as bonuses, into
next year when possible and accelerate deductions into the
current year to minimize your taxable income.
Tax rates on long-term capital gains and qualified dividends
will remain at a maximum 15% through 2012, and those in
the two lowest income-tax brackets -- 10% and 15% -- will
continue to enjoy a 0% capital-gains rate.
Bigger Paychecks for Most
One of the major elements of the tax package is a one-year
reduction in the payroll tax that funds Social Security. FICA
taxes will drop from 6.2% to 4.2% for most workers. Since
the tax applies to up to $106,800 in 2011, the tax cut is worth
as much as $2,136 for a worker or $4,272 for a working
couple.
(The self-employed will pay 10.4% on income up to the cap,
down from 12.4% in 2010.) The 1.45% portion of payroll
taxes that funds Medicare will continue to apply to all
earnings with no cap.
But not everyone will benefit from the payroll-tax holiday.
Workers who do not participate in the Social Security
system, such as some public-school teachers and many
civil servants, will see no reduction in their payroll taxes. And
some federal employees will get hit with a double whammy:
no break on payroll taxes and a wage freeze next year.
Some lower-income workers may also feel as if Santa left
them a lump of coal in their stocking. Although they will
benefit from the lower payroll tax, the tax break will not be as
generous as the Making Work Pay credit that reduced their
taxes by up to $400 for individuals and up to $800 for
married couples in 2010 (subject to income limits).
No Cap on Exemptions, Deductions
Upper-income taxpayers will also benefit from no limit on
their itemized deductions and the personal exemptions that
they claim for themselves, their spouse and dependents. In
the past, those tax benefits were reduced above certain
income levels. Caps on both deductions and personal
exemptions were eliminated for 2010, and the legislative
package extends those valuable tax breaks through 2012.
Middle Class Dodge the AMT
The compromise tax package boosts the exemption levels
for the alternative minimum tax, protecting more than 20
million middle-income taxpayers from being snagged by the
parallel tax system that disallows most tax deductions and
exemptions. The AMT, designed 40 years ago to ensure that
the loophole-savvy wealthy paid at least some taxes, has
never been indexed for inflation. So over the decades, the
AMT has morphed from a class tax into a mass tax,
prompting Congress to approve temporary patches each
year to lift the AMT exemption level and spare millions of
middle-class taxpayers from becoming unintended victims
of the stealth tax. The package increases the AMT
exemption levels for 2010 and 2011.
More Breaks for Education Costs
The popular American Opportunity tax credit, worth up to
$2,500 to offset the high cost of college, was scheduled to
expire at the end of 2010. Now it has been extended through
2012. The full credit, which reduces your tax bill dollar-for-
dollar, is available to individuals with incomes of up to
$80,000 and married couples with joint income of up to
$160,000. The credit phases out above those income
levels, disappearing at $90,000 for individuals and
$180,000 for married couples.
The tax package also extends more-generous contribution
levels and qualified tax-free distributions for Coverdell
Education Savings Accounts, which can be used to fund
elementary- and secondary-school expenses in addition to
college costs.
Maximum contribution levels had been slated to drop from
$2,000 to $500 per year beginning in 2011, and tax-free
distribution would have been limited to college expenses.
The package extends existing funding and distribution rules
through 2012.
Two-Year Reprieves
A host of other popular tax breaks that had expired at the
end of 2009 have been reinstated for 2010 and 2011. You’ll
appreciate them when you file your taxes next spring. They
include:
• a choice between deducting state sales taxes or state
income taxes;
• a tax deduction of up to $4,000 for college tuition costs
available to some taxpayers whose incomes are too high to
qualify for the American Opportunity credit;
• a deduction of up to $250 that teachers can claim for our-
of-pocket expenses for classroom supplies, even if they don’
t itemize their deductions;
• and the ability of taxpayers who are age 70½ or older to
donate up to $100,000 of their IRAs directly to a charity and
exclude the amount of their donation from their taxable
income.
More-Generous Estate Tax
The most controversial element of the tax package is a
reinstatement of the federal estate tax, which had
temporarily disappeared in 2010, with a higher exemption
level and a lower rate than in the past.
Beginning in 2011, estates valued at $5 million or less ($10
million or less for married couples) will escape the federal
estate tax completely, and estates above those thresholds
would be taxed at a 35% rate.
House Democrats, who had been excluded from
negotiations on the package, railed against the deal, which
they claimed is a giveaway to the rich. But in the end, they
failed in efforts to ratchet down the exemption to the $3.5
million level that had been in effect in 2009 before the estate
tax expired and to increase the tax rate to 45%.
Cut your tax bill to the bone by claiming all the breaks you deserve –
including some you may have forgotten or never even knew about.
The Most-Overlooked Tax Deductions
State Sales Taxes
This write-off makes sense primarily for those who live in states that do not impose an
income tax. You must choose between deducting state and local income taxes or state
and local sales taxes. For most citizens of income-tax states, the income-tax deduction is
a better deal.
If you purchased a vehicle, boat, airplane or even home-building materials, you get to add
the state sales tax you paid to the amount shown in IRS tables for your state, to the extent
the sales tax rate you paid doesn't exceed the state's general sales tax rate. The IRS even
has a calculator on its Web site to help you figure the deduction, which varies by your state
and income level.
Reinvested Dividends
This is the break former IRS Commissioner Fred Goldberg told Kiplinger's that a lot of
taxpayers miss.
If, like most investors, you have mutual-fund dividends automatically invested in extra
shares, remember that each reinvestment increases your "tax basis" in the fund. That, in
turn, reduces the taxable capital gain when you redeem shares.
Forgetting to include the reinvested dividends in your basis -- which you subtract from the
sale proceeds to pinpoint your gain -- means overpaying your tax.
Out-of-Pocket
Charitable Deductions
You can write off out-of-pocket costs incurred while doing good works.
The money you spend on ingredients for casseroles you prepared for a soup kitchen, for
example, or on stamps you buy for your school's fund-raiser counts as a charitable
contribution.
Also, if you drove your car for charity in 2010, remember to deduct 14 cents per mile.
Student-Loan Interest
Paid by Mom and Dad
Generally, you can only deduct mortgage or student-loan interest if you are legally required
to repay the debt. But if parents pay back a child's student loan, the IRS treats it as though
the money was given to the child, who then paid the debt.
A child who’s not claimed as a dependent can qualify to deduct up to $2,500 of student-
loan interest paid by Mom and Dad. And he or she doesn't have to itemize to use this
money-saver.
Job-Hunting Costs
If you’re among the millions of unemployed Americans who were looking for a job in 2010,
keep track of your job-search expenses. If you’re looking for a position in the same line of
work, you can deduct job-hunting costs as miscellaneous expenses if you itemize, but only
to the extent that the total of your total miscellaneous itemized deductions exceed 2% of
your adjusted gross income. Job-hunting expenses incurred while looking for your first job
don’t qualify.
Deductible job-search costs include, but aren’t limited to --
• Food, lodging and transportation if your search takes you away from home overnight
• Cab fares
• Employment agency fees
• Costs of printing resumes, business cards, postage, and advertising
Moving Expenses to Take Your First Job
As we just mentioned, job-hunting expenses incurred while looking for your first job are
not deductible. But, moving expenses to get to that position are. And you get this write-off
even if you don't itemize.
To qualify for the deduction, your first job must be at least 50 miles away from your old
home. If you qualify, you can deduct the cost of getting yourself and your household goods
to the new area, including 16 ½ cents per mile for driving your own vehicle for a 2010
move, plus parking fees and tolls.
Military Reservists'
Travel Expenses
Members of the National Guard or military reserve may tap a deduction for travel expenses
to drills or meetings. To qualify, you must travel more than 100 miles from home and be
away from home overnight.
If you qualify, you can deduct the cost of lodging and half the cost of your meals, plus 55
cents per mile for driving your own car to get to and from 2010 drills. In any event, add
parking fees or tolls. You get this deduction regardless of whether you itemize.
Health Insurance Deduction to Reduce Self-employment Tax
Business owners have always been allowed to deduct health insurance premiums for
themselves and their family in computing adjusted gross income on the front page of
Form 1040. For 2010, they can also deduct the cost of those health insurance premiums
in calculating self-employment tax on Schedule SE.
The IRS has hidden this write-off on line 3 of Schedule SE. On that line, you are told to add
your self-employment income from lines 1 and 2, subtract the amount claimed on line 29
of Form 1040 (your health insurance premiums) and enter the net amount on line 3.
Child-Care Credit
It's easy to overlook the child-care credit if you pay your child-care bills through a
reimbursement account at work. Although only $5,000 of such expenses can be paid
through a tax-favored reimbursement account, up to $6,000 (for the care of two or more
children) can qualify for the credit.
So, if you run the maximum allowed by your work plan, you can claim the credit on as
much as $1,000 of additional expenses you pay for work-related child care. That would cut
your tax bill by at least $200.
Estate Tax on Income
In Respect of a Decedent
This sounds complicated, but it can save you a lot of money if you inherited an IRA from
someone whose estate was big enough to be subject to the federal estate tax. Basically,
you get an income-tax deduction for the amount of estate tax paid on the IRA assets you
received. Let's say you inherited a $100,000 IRA, and the fact that the money was included
in your benefactor's estate added $45,000 to the estate-tax bill.
You get to deduct that $45,000 on your tax returns as you withdraw the money from the IRA.
If you withdraw $50,000 in one year, for example, you get to claim a $22,500 itemized
deduction on Schedule A. That would save you $6,300 in the 28% bracket.
State Tax Paid Last Spring
Did you owe tax when you filed your 2009 state tax return in the spring of 2010? Then, for
goodness sake, remember to include that amount with your state-tax deduction on your
2010 return, along with state income taxes withheld from your paychecks or paid via
quarterly estimated payments.
Finance & Investing
Refinancing Points
When you buy a house, you get to deduct points paid to get your mortgage in one fell
swoop. When you refinance a mortgage, though, you have to deduct the points over the life
of the loan. That means you can deduct 1/30th of the points a year if it's a 30-year
mortgage -- that's $33 a year for each $1,000 of points you paid. Not much, maybe, but
don't throw it away.
Even more important, in the year you pay off the loan -- because you sell the house or
refinance again -- you get to deduct all as-yet-undeducted points. There's one exception to
this sweet rule: If you refinance a refinanced loan with the same lender, you add the points
paid on the latest deal to the leftovers from the previous refinancing ... and deduct the
amount gradually over the life of the new loan.
Jury Pay Paid to Employer
Many employers continue to pay employees' full salary while they serve on jury duty, and
some require the employees to turn over their jury fees to the company coffers. The only
problem is that the IRS demands that you report those fees as taxable income. To even
things out, you get to deduct the amount paid to your employer.
But how do you do it? There's no line on Form 1040 labeled "jury fees." Instead the write-
off goes on line 36, which purports to be for simply totaling up the deductions that get their
own lines. Add your jury fees to the total of your other write-offs, and write "jury pay" on the
dotted line.
American Opportunity Credit
This tax credit, which has been extended through 2012, is available for up to $2,500 of
college tuition and related expenses paid during the year. The full credit is available to
individuals whose modified adjusted gross income is $80,000 or less ($160,000 or less
for married couples filing a joint return). The credit is phased out for taxpayers with
incomes above those levels. This credit is juicier than the old Hope credit – it has higher
income limits and bigger tax breaks, and it covers all four years of college. And if the credit
exceeds your tax liability (regular and AMT), it is partially refundable.
Making Work Pay Credit
You’ve probably been enjoying the fruits of this credit via reduced payroll tax withholding
throughout the year. But to lock in your savings – by reducing your tax bill by $400 if you’re
single or $800 if you’re married and file a joint return – you’ll need to actually claim the
credit on your 2010 tax return -- and you'll use Schedule M to do so.
The credit is equal to 6.2% of your earned income, capped at $400 or $800. For single
filers, it starts phasing out at $75,000 of adjusted gross income and dries up at $95,000.
The phase-out zone for couples is $150,000 to $190,000.
Credit for Energy-Saving Home Improvements
You can claim a tax credit equal to 30% of the cost of energy-saving home improvements
up to a maximum of $1,500. This cap applies to both 2009 and 2010 combined, so if you
claimed the maximum $1,500 in 2009, you don’t get another crack at it for 2010. The credit
applies to biomass fuel stoves, qualifying skylights, windows and outside doors, and high-
efficiency furnaces, water heaters and central air conditioners.
For 2011, this credit goes back to pre-2009 limits (for example, $500 maximum credit for
all years with no more than $200 for windows).
There’s also no dollar limit on the separate credit for homeowners who install qualified
residential alternative energy equipment, such as solar hot water heaters, geothermal
heat pumps and wind turbines. Your credit can be 30% of the total cost (including labor) of
such systems installed through 2016.
Finance & Investing
We’re talking about stock that a life-insurance policyholder receives when an insurer
switches from being a mutual company owned by policyholders to a stock company
owned by stockholders. The IRS’s long-standing position is that such stock has no “tax
basis” so that, when the shares are sold, the taxpayer owes tax on 100% of the proceeds
of the sale. But after a long legal struggle, a federal court ruled that the IRS is wrong. The
court didn’t say what the basis of the stock is, but many experts think it’s whatever the
shares were worth when they were distributed to policyholders.
If you sold stock in 2010 that you received in a demutualization, be sure to claim a basis to
hold down your tax bill.
including some you may have forgotten or never even knew about.
The Most-Overlooked Tax Deductions
State Sales Taxes
This write-off makes sense primarily for those who live in states that do not impose an
income tax. You must choose between deducting state and local income taxes or state
and local sales taxes. For most citizens of income-tax states, the income-tax deduction is
a better deal.
If you purchased a vehicle, boat, airplane or even home-building materials, you get to add
the state sales tax you paid to the amount shown in IRS tables for your state, to the extent
the sales tax rate you paid doesn't exceed the state's general sales tax rate. The IRS even
has a calculator on its Web site to help you figure the deduction, which varies by your state
and income level.
Reinvested Dividends
This is the break former IRS Commissioner Fred Goldberg told Kiplinger's that a lot of
taxpayers miss.
If, like most investors, you have mutual-fund dividends automatically invested in extra
shares, remember that each reinvestment increases your "tax basis" in the fund. That, in
turn, reduces the taxable capital gain when you redeem shares.
Forgetting to include the reinvested dividends in your basis -- which you subtract from the
sale proceeds to pinpoint your gain -- means overpaying your tax.
Out-of-Pocket
Charitable Deductions
You can write off out-of-pocket costs incurred while doing good works.
The money you spend on ingredients for casseroles you prepared for a soup kitchen, for
example, or on stamps you buy for your school's fund-raiser counts as a charitable
contribution.
Also, if you drove your car for charity in 2010, remember to deduct 14 cents per mile.
Student-Loan Interest
Paid by Mom and Dad
Generally, you can only deduct mortgage or student-loan interest if you are legally required
to repay the debt. But if parents pay back a child's student loan, the IRS treats it as though
the money was given to the child, who then paid the debt.
A child who’s not claimed as a dependent can qualify to deduct up to $2,500 of student-
loan interest paid by Mom and Dad. And he or she doesn't have to itemize to use this
money-saver.
Job-Hunting Costs
If you’re among the millions of unemployed Americans who were looking for a job in 2010,
keep track of your job-search expenses. If you’re looking for a position in the same line of
work, you can deduct job-hunting costs as miscellaneous expenses if you itemize, but only
to the extent that the total of your total miscellaneous itemized deductions exceed 2% of
your adjusted gross income. Job-hunting expenses incurred while looking for your first job
don’t qualify.
Deductible job-search costs include, but aren’t limited to --
• Food, lodging and transportation if your search takes you away from home overnight
• Cab fares
• Employment agency fees
• Costs of printing resumes, business cards, postage, and advertising
Moving Expenses to Take Your First Job
As we just mentioned, job-hunting expenses incurred while looking for your first job are
not deductible. But, moving expenses to get to that position are. And you get this write-off
even if you don't itemize.
To qualify for the deduction, your first job must be at least 50 miles away from your old
home. If you qualify, you can deduct the cost of getting yourself and your household goods
to the new area, including 16 ½ cents per mile for driving your own vehicle for a 2010
move, plus parking fees and tolls.
Military Reservists'
Travel Expenses
Members of the National Guard or military reserve may tap a deduction for travel expenses
to drills or meetings. To qualify, you must travel more than 100 miles from home and be
away from home overnight.
If you qualify, you can deduct the cost of lodging and half the cost of your meals, plus 55
cents per mile for driving your own car to get to and from 2010 drills. In any event, add
parking fees or tolls. You get this deduction regardless of whether you itemize.
Health Insurance Deduction to Reduce Self-employment Tax
Business owners have always been allowed to deduct health insurance premiums for
themselves and their family in computing adjusted gross income on the front page of
Form 1040. For 2010, they can also deduct the cost of those health insurance premiums
in calculating self-employment tax on Schedule SE.
The IRS has hidden this write-off on line 3 of Schedule SE. On that line, you are told to add
your self-employment income from lines 1 and 2, subtract the amount claimed on line 29
of Form 1040 (your health insurance premiums) and enter the net amount on line 3.
Child-Care Credit
It's easy to overlook the child-care credit if you pay your child-care bills through a
reimbursement account at work. Although only $5,000 of such expenses can be paid
through a tax-favored reimbursement account, up to $6,000 (for the care of two or more
children) can qualify for the credit.
So, if you run the maximum allowed by your work plan, you can claim the credit on as
much as $1,000 of additional expenses you pay for work-related child care. That would cut
your tax bill by at least $200.
Estate Tax on Income
In Respect of a Decedent
This sounds complicated, but it can save you a lot of money if you inherited an IRA from
someone whose estate was big enough to be subject to the federal estate tax. Basically,
you get an income-tax deduction for the amount of estate tax paid on the IRA assets you
received. Let's say you inherited a $100,000 IRA, and the fact that the money was included
in your benefactor's estate added $45,000 to the estate-tax bill.
You get to deduct that $45,000 on your tax returns as you withdraw the money from the IRA.
If you withdraw $50,000 in one year, for example, you get to claim a $22,500 itemized
deduction on Schedule A. That would save you $6,300 in the 28% bracket.
State Tax Paid Last Spring
Did you owe tax when you filed your 2009 state tax return in the spring of 2010? Then, for
goodness sake, remember to include that amount with your state-tax deduction on your
2010 return, along with state income taxes withheld from your paychecks or paid via
quarterly estimated payments.
Finance & Investing
Refinancing Points
When you buy a house, you get to deduct points paid to get your mortgage in one fell
swoop. When you refinance a mortgage, though, you have to deduct the points over the life
of the loan. That means you can deduct 1/30th of the points a year if it's a 30-year
mortgage -- that's $33 a year for each $1,000 of points you paid. Not much, maybe, but
don't throw it away.
Even more important, in the year you pay off the loan -- because you sell the house or
refinance again -- you get to deduct all as-yet-undeducted points. There's one exception to
this sweet rule: If you refinance a refinanced loan with the same lender, you add the points
paid on the latest deal to the leftovers from the previous refinancing ... and deduct the
amount gradually over the life of the new loan.
Jury Pay Paid to Employer
Many employers continue to pay employees' full salary while they serve on jury duty, and
some require the employees to turn over their jury fees to the company coffers. The only
problem is that the IRS demands that you report those fees as taxable income. To even
things out, you get to deduct the amount paid to your employer.
But how do you do it? There's no line on Form 1040 labeled "jury fees." Instead the write-
off goes on line 36, which purports to be for simply totaling up the deductions that get their
own lines. Add your jury fees to the total of your other write-offs, and write "jury pay" on the
dotted line.
American Opportunity Credit
This tax credit, which has been extended through 2012, is available for up to $2,500 of
college tuition and related expenses paid during the year. The full credit is available to
individuals whose modified adjusted gross income is $80,000 or less ($160,000 or less
for married couples filing a joint return). The credit is phased out for taxpayers with
incomes above those levels. This credit is juicier than the old Hope credit – it has higher
income limits and bigger tax breaks, and it covers all four years of college. And if the credit
exceeds your tax liability (regular and AMT), it is partially refundable.
Making Work Pay Credit
You’ve probably been enjoying the fruits of this credit via reduced payroll tax withholding
throughout the year. But to lock in your savings – by reducing your tax bill by $400 if you’re
single or $800 if you’re married and file a joint return – you’ll need to actually claim the
credit on your 2010 tax return -- and you'll use Schedule M to do so.
The credit is equal to 6.2% of your earned income, capped at $400 or $800. For single
filers, it starts phasing out at $75,000 of adjusted gross income and dries up at $95,000.
The phase-out zone for couples is $150,000 to $190,000.
Credit for Energy-Saving Home Improvements
You can claim a tax credit equal to 30% of the cost of energy-saving home improvements
up to a maximum of $1,500. This cap applies to both 2009 and 2010 combined, so if you
claimed the maximum $1,500 in 2009, you don’t get another crack at it for 2010. The credit
applies to biomass fuel stoves, qualifying skylights, windows and outside doors, and high-
efficiency furnaces, water heaters and central air conditioners.
For 2011, this credit goes back to pre-2009 limits (for example, $500 maximum credit for
all years with no more than $200 for windows).
There’s also no dollar limit on the separate credit for homeowners who install qualified
residential alternative energy equipment, such as solar hot water heaters, geothermal
heat pumps and wind turbines. Your credit can be 30% of the total cost (including labor) of
such systems installed through 2016.
Finance & Investing
We’re talking about stock that a life-insurance policyholder receives when an insurer
switches from being a mutual company owned by policyholders to a stock company
owned by stockholders. The IRS’s long-standing position is that such stock has no “tax
basis” so that, when the shares are sold, the taxpayer owes tax on 100% of the proceeds
of the sale. But after a long legal struggle, a federal court ruled that the IRS is wrong. The
court didn’t say what the basis of the stock is, but many experts think it’s whatever the
shares were worth when they were distributed to policyholders.
If you sold stock in 2010 that you received in a demutualization, be sure to claim a basis to
hold down your tax bill.
Tax Credits That Anyone Can Claim
Tax forms can be complicated, but don't let
the complexity scare you away from tax
credits that are legally yours to claim.
Tax deductions and credits aren't just for
big companies and finance-savvy folks.
You might be surprised how many tax
breaks - in the form of both credits and
deductions - can be applied to your tax
return.
If the thought of doing taxes makes you break into a cold
sweat, you're probably like many of us; fearful of making
a mistake and having the IRS show up at your door. Tax
forms can be complicated, but don't let the complexity
scare you away from tax credits that are legally yours to
claim.
Tax deductions and credits aren't just for big companies
and finance-savvy folks. Look over the list below; you
might be surprised how many tax breaks - in the form of
both credits and deductions - can be applied to your tax
return. (For more, see Tablets To 1040s: How Taxes
Began.)
1. Charitable Donations
Most cash donations made to charity in the tax year can
be claimed as an itemized deduction on your tax return,
but many folks don't realize that non-cash contributions
can be claimed as well. If you've donated to a charity or
non-profit organization using your credit card, you can
claim that donation.
If you've donated material goods or services, be sure that
you have a receipt from the charity stating the value of the
goods or services you donated. You can claim that value
as a charitable deduction. (For more, see the Top 5 Most
Charitable American Cities.)
2. Child Care Credit
If you pay for child care regularly while you are at work,
you may be eligible for a tax credit. The amount of care
covered can be up to $6,000 for the care of two or more
children, according to Kevin McCormally, the Editorial
Director of Kiplinger.com. Be sure to keep clear records;
paying your child care provider in cash while keeping no
traceable record of the payment will make it extremely
difficult to claim the amount on your tax return.
3. Home Energy Efficiency Improvements
If you have to make any home improvements, go with the
energy efficient options. Consumers can claim 30% of the
cost, up to $1,500, of energy efficient home improvement
items, such as "energy-efficient windows, insulation,
doors, roofs, and heating and cooling equipment in
existing homes," according to the Department of Energy.
So replace those doors and windows by the end of the
year and get a break on your taxes.
4. Residential Renewable Energy Tax
Credits
Another "green" tax break is for renewable energy
additions made to your home. The Department of Energy
includes "solar energy systems (including solar water
heating and solar electric systems), small wind systems,
geothermal heat pumps, and residential fuel cell and
microturbine systems".
Home owners can get a tax credit of up to 30% of the cost
of these improvements. When you consider how much
money this type of renewable energy will save you in
lower electric bills over the years and combine that with
the 30% tax credit, greening your home begins to look like
a pretty smart move. (To learn more, check out the Top 10
Green Industries.)
5. Automobile Tax Credits
Get green on your commute and you could see more
green on your tax return. Purchase a hybrid gas-electric
or alternative fuel vehicle before the end of 2010, and you
can get a credit on your taxes.
Amounts vary according to what type of vehicle you
purchase and some credits are phased out as dealers
sell a certain amount of cars, so be sure to ask your car
dealer before you purchase. If you're a DIY person, you
can also get a tax credit for 10% of the cost of a plug-in
hybrid conversion kit.
6. Relocating for Work
Whether you're moving for your very first job, for a new
job or for relocation with your current employer, you can
recover some of your relocation expenses.
You have to validate your move by passing a couple of
"tests". The first test involves the distance. The distance
from your new work location to your former home has to
be at least 50 miles longer than your previous commute.
The second test is just a way of proving that you actually
moved for the job; you have to be employed for at least 39
weeks out of the 12 months immediately following your
move, in the vicinity of your new job. You don't have to
actually be employed with the same company, just in the
same general area. (Looking for a job? Check out 4 New
Job-Search Trends.)
Bottom Line
Don't be fooled into thinking that tax credits and
deductions are for everybody but you. Simply donating,
working and improving your home can add up to
significant savings on your taxes, so start getting out
those receipts and adding up the numbers.
Document what you claim on the deductions and ask your
tax professional if you have any questions about what you
can claim. Then go for it; you might be getting a much
bigger refund than you thought.
Tax forms can be complicated, but don't let
the complexity scare you away from tax
credits that are legally yours to claim.
Tax deductions and credits aren't just for
big companies and finance-savvy folks.
You might be surprised how many tax
breaks - in the form of both credits and
deductions - can be applied to your tax
return.
If the thought of doing taxes makes you break into a cold
sweat, you're probably like many of us; fearful of making
a mistake and having the IRS show up at your door. Tax
forms can be complicated, but don't let the complexity
scare you away from tax credits that are legally yours to
claim.
Tax deductions and credits aren't just for big companies
and finance-savvy folks. Look over the list below; you
might be surprised how many tax breaks - in the form of
both credits and deductions - can be applied to your tax
return. (For more, see Tablets To 1040s: How Taxes
Began.)
1. Charitable Donations
Most cash donations made to charity in the tax year can
be claimed as an itemized deduction on your tax return,
but many folks don't realize that non-cash contributions
can be claimed as well. If you've donated to a charity or
non-profit organization using your credit card, you can
claim that donation.
If you've donated material goods or services, be sure that
you have a receipt from the charity stating the value of the
goods or services you donated. You can claim that value
as a charitable deduction. (For more, see the Top 5 Most
Charitable American Cities.)
2. Child Care Credit
If you pay for child care regularly while you are at work,
you may be eligible for a tax credit. The amount of care
covered can be up to $6,000 for the care of two or more
children, according to Kevin McCormally, the Editorial
Director of Kiplinger.com. Be sure to keep clear records;
paying your child care provider in cash while keeping no
traceable record of the payment will make it extremely
difficult to claim the amount on your tax return.
3. Home Energy Efficiency Improvements
If you have to make any home improvements, go with the
energy efficient options. Consumers can claim 30% of the
cost, up to $1,500, of energy efficient home improvement
items, such as "energy-efficient windows, insulation,
doors, roofs, and heating and cooling equipment in
existing homes," according to the Department of Energy.
So replace those doors and windows by the end of the
year and get a break on your taxes.
4. Residential Renewable Energy Tax
Credits
Another "green" tax break is for renewable energy
additions made to your home. The Department of Energy
includes "solar energy systems (including solar water
heating and solar electric systems), small wind systems,
geothermal heat pumps, and residential fuel cell and
microturbine systems".
Home owners can get a tax credit of up to 30% of the cost
of these improvements. When you consider how much
money this type of renewable energy will save you in
lower electric bills over the years and combine that with
the 30% tax credit, greening your home begins to look like
a pretty smart move. (To learn more, check out the Top 10
Green Industries.)
5. Automobile Tax Credits
Get green on your commute and you could see more
green on your tax return. Purchase a hybrid gas-electric
or alternative fuel vehicle before the end of 2010, and you
can get a credit on your taxes.
Amounts vary according to what type of vehicle you
purchase and some credits are phased out as dealers
sell a certain amount of cars, so be sure to ask your car
dealer before you purchase. If you're a DIY person, you
can also get a tax credit for 10% of the cost of a plug-in
hybrid conversion kit.
6. Relocating for Work
Whether you're moving for your very first job, for a new
job or for relocation with your current employer, you can
recover some of your relocation expenses.
You have to validate your move by passing a couple of
"tests". The first test involves the distance. The distance
from your new work location to your former home has to
be at least 50 miles longer than your previous commute.
The second test is just a way of proving that you actually
moved for the job; you have to be employed for at least 39
weeks out of the 12 months immediately following your
move, in the vicinity of your new job. You don't have to
actually be employed with the same company, just in the
same general area. (Looking for a job? Check out 4 New
Job-Search Trends.)
Bottom Line
Don't be fooled into thinking that tax credits and
deductions are for everybody but you. Simply donating,
working and improving your home can add up to
significant savings on your taxes, so start getting out
those receipts and adding up the numbers.
Document what you claim on the deductions and ask your
tax professional if you have any questions about what you
can claim. Then go for it; you might be getting a much
bigger refund than you thought.
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