Tax Tips
Students: Claiming
exempt on withholding forms can work to your detriment. If your parents can claim you and you make over $5,450.00 for the
year you may/will owe federal/state income taxes. It is better for you to claim single zero and if you don’t owe at
the end of the year you will get a tax refund. Look at the withholdings as a savings.
Rental
Income: The Internal Revenue service has determined that Schedule E (real estate rental property) filers
are under reporting their income and overstating their expenses. They have a watchful eye on this schedule, so receipts and
leases will be reviewed during an audit. Make sure you have evidence to prove these.
Energy Credit: The credit for energy savings on home improvements returns in 2009. You will
be able to claim the 10% tax credit.
Recovery Rebate Credit: If you did not receive the full economic stimulus payment, you may be able to claim the recovery rebate credit.
Standard mileage: the deduction for 2009 is 55 cent for business. 24 cents for medical or moving
and 14 cent for contributions.
Personal Exemption: The
value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.
Standard Deduction: The new standard deduction is $11,400 for married couples filing a joint
return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household
(up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage
interest, charitable contributions and state and local taxes.
Tax-bracket
thresholds: Tax-bracket thresholds increase for each filing status. For a married couple filing a joint
return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900,
up from $65,100 in 2008.
The maximum earned income tax credit for low and moderate
income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for
joint return filers with two or more children is $43,415, up from $41,646.
Gift Exclusion:
The annual gift exclusion rises to $13,000, up from $12,000 in 2008.
Financial Tips
Stockpile Your Cash: be prepared for the unexpected. Stop spending
as much as possible. Cut expenses where possible and prepare a monthly budget that includes a savings plan. Pay the minimum
on your credit cards, but on a timely basis. Pick the credit card with the highest interest rate and try to pay more than
the minimum payment. Also, very important-credit card companies have been changing the due dates, so that if you pay late
they can charge a late fee. So look at your due date on each credit card. Also card companies have been lowering the extended
credit limits, so don’t over spend unknowingly.
Your Savings Plan: this should be made up of at least 6 months of your expenses. If your budget calls for monthly payments in the amount
of $2,300, then you should try to accumulate $13,000 in savings. As you know, unemployment is on the rise and should your
job disappear, you will have at least 6 months of payments saved and time look for another job.
3. Foreclosures: prevent this action by prepaying your mortgage/rent at least one month in
advance. Easier said than done, but if you can put away at least $50-$100 per week, by cutting other expenses, once you reach
the goal of one mortgage/rental payment immediately to the mortgage company or rental office.
Tax Refund: gather all your tax papers and file early.
Upon receiving your refund, put it away or perform one of the above-mentioned tasks. Most people use this refund to catch-up
on bills, but slow down and think about which payments to make first. Don’t let your creditors dictate your payment
plans.
Banking & Investments:
Stay the course. We realize that your retirement savings have decreased due to the stock market turmoil; however this could
be an opportunity to purchase stock at a lower price. We further advise you to take tax losses on those lemon stocks so you
might realize your losses up to $3,000 as a tax write-off against ordinary income. In the future we expect banks to continue
to be sold or merge. Some are healthier than other.
