This March 17th certainly is lucky for me because just five days ago I posted 13 often-overlooked deductions. That means adding just four more will give me — and you! — 17 not-to-miss tax breaks!
The first 13 are:
- Property tax standard deduction
- Many medical costs
- Atypical charitable donations
- Reinvested dividends
- Moving expenses
- Job hunting
- Home office costs
- Military reserve travel
- Child care costs
- State income taxes
- Retirement savings
- Jury pay
- Refinancing points
And now, St. Patrick's Day saving of the tax green continues:
14. Combine business and pleasure travel
If
you're self-employed and travel for business, consider tacking a few vacation days onto your next trip. If your travel is primarily for business purposes, you can deduct 100 percent of your airfare, even if you take a day or two off to see the local sights. Don't try to fudge things. Your other expenses, such as lodging, hotel
tips and 50 percent of meals, can be deducted only to the extent that they covered the days you did real business.
15. Buy your first home
If you've never owned a home or haven't been on the title of one in the last three years, buy a house now and get an $8,000 tax credit from Uncle Sam. This new law is part of the American Recovery and Reinvestment Act, aka Obama stimulus bill, signed into law last month. Now if you buy your first home between Jan. 1, 2009, and Dec. 1, 2009,
can get the eight grand back on your taxes. Better news, it's a real credit, meaning you don't have to repay it as long as you stay in your first residence for three years. Best news, you can claim it right now on your 2008 tax return. The IRS says it will start accepting electronically filed Form 5405, the document you need to submit to claim the credit, on March 30.
16. PMI deduction
If
you already own a home and got the mortgage in 2007 or later, you might be able to deduct any private mortgage insurance (PMI) payments you make. PMI typically is required by lenders if your down payment is less than 20 percent. PMI premiums in certain cases now are deductible. In addition to taking out the loan in 2007 or later, it's limited to homeowners making $100,000 or less (and reduced if you make up to $109,000, after which it is eliminated) and you have to itemize to claim it.
17. Contribute to your IRA
No, this is not the same as No. 11. To get that previously mentioned tax break, you first have to put money into a retirement plan. Your contribution can be to an individual retirement account, as well as to a plan offered by your employer (or both). It's too late to do anything about 2008 retirement contributions to your office 401(k), but you have until April 15 to put money into an individual retirement account and have it count toward the 2008 tax year.
You can contribute to a traditional or Roth IRA. If you go the traditional route, you might be able to deduct at least part of your contribution on your 2008 return. Even if you don't get an immediate tax
write-off because you have a Roth, max it out anyway. The more money
you put it and the sooner you do so, the longer the account has to grow
tax-free.
But whatever type of IRA you have, the key is to contribute if you haven't already or max out your contribution if you've only put in a little bit. For 2008 you can stash up to $5,000 in an IRA or $6,000 if you're age 50 or older.
Yes, I know it's a bit disconcerting to put money into such a volatile stock market. But young investors who buy low now have a long time for the market to turn around. Older savers can opt for safer investments.
Either way, you have until April 15 in most cases to make your 2008 IRA contribution. Don't miss the deadline.
Here's hoping this St. Patrick's Day brings you much luck o' the Irish and that these 17 tax tips can help you save at least a little green on your tax return.
