Top Ten Tax Tips to Know Before Filing

    Things to know before you file:

    1.  Check for deductions -- Even if you don't itemize, their still may be
        deductions that are available to you. These can include traditional
        IRA, SEP and other qualified retirement plan contributions, student
        loan interest, alimony, job-related moving expenses and self-employed
        health insurance premiums. There are a handful of additional
        deductions, so take your time and be thorough.

    2.  Going green pays -- If you made energy-efficient improvements to your
        home in 2007 you may garner a tax credit of up to $500. Improvements
        include exterior windows and doors, insulation to walls, ceilings,
        high efficiency water heaters, furnaces and boilers, and central air
        conditioning units. Additionally, a tax credit may be available for
        the purchase of a hybrid or alternative fuel vehicle. Check with the
        IRS at http://www.irs.gov for a list of qualifying vehicles.

    3.  New rules for charitable contributions -- Starting this year, a donor
        must be able to show proof of a donation to take a deduction for any
        monetary charitable gift, including clothing. So make sure you have a
        cancelled check, credit card statement or receipt from the charity to
        verify your donation.

    4.  Count your kids -- The Child Tax Credit allows you to reduce your
        federal income tax by $1,000 for each qualifying child under the age
        of 17. This credit begins to phase out if your modified Adjusted Gross
        Income is above $110,000 for joint filers, or $75,000 for single or
        head of household filers.

    5.  529 is here to stay -- The tax benefits of 529 college savings plans,
        which were to expire in 2010, are now a permanent part of the tax
        code. These plans give parents and other relatives a tax-advantaged
        way to save money for higher education expenses. Funds in the account
        grow tax-free and withdrawals also are tax-free if they are used to
        pay for qualified educational expenses. To decide on the plan that's
        right for you, consult with a CPA. He or she can help you determine
        the best strategy for saving for your child's education.

    6.  Don't rush -- Take a deep breath and relax. Rushing through your
        paperwork won't make tax-time any less painful. In fact, speeding
        through tax prep can lead to mistakes, which can spell much bigger
        headaches and unnecessary correspondence with the IRS later on.
        Double-check everything. Is your name spelled correctly? Did you
        include your social security number? Go slow.

    7.  File on time but if you can't pay, don't panic -- Unfortunately, the
        IRS isn't as forgiving as we'd like to think. Especially when it comes
        to missing important deadlines. Even if you don't have all your
        materials together, file an extension (usually 6 months). Then work to
        finish your taxes as soon as possible to avoid additional charges.

        The IRS offers several payment options. Todd Koch, a CPA with John A.
        Knutson & Co., PLLP, in St. Paul says, "If you cannot pay the full
        balance due, file your return anyway. The penalties for late payments
        are substantially higher for late filed returns. If you have no other
        resources, you can start by filing a Form 9465 with the IRS, in which
        you request a monthly installment arrangement."

    8.  Don't forget about the State -- When you have completed your Federal
        income taxes, you are not done. Now you have to look at differences
        between the State and Federal taxes. This can lead to additional
        deductions such as those for K-12 school expenses and U.S. Government
        interest. It can also lead to disallowed deductions such as post
        secondary education expenses and state income taxes paid.

    9.  Never fear, help is here -- Don't be afraid to ask for help. There are
        options that can assist you if you're struggling with your tax
        preparation. The free CPA referral service at http://www.mytaxtime.com
        is a convenient, confidential and proven way to find an accounting
        professional for you and your business. Deployed military personnel
        and their spouses can also receive free tax preparation by CPAs. This
        service is offered in cooperation with the MNCPA and the Minnesota
        National Guard Family Programs. Call 888-234-1274 to be connected with
        a volunteer.

    10. Plan for the future -- Tax-season doesn't always have to consist of
        hair pulling, crumpled papers and broken pencils. Think of it as a
        time when you can get a perspective on your financial situation and
        plan for 2008. Koch says, "Tax planning is not an event, it is a
        process. It's never to early to start." Also, consider letting a
        professional handle it. A CPA can assist with all of your near- and
        long-term financial planning questions. They know the code, they're
        smart with your money and they can save your sanity. Find articles and
        tips for year-round tax planning at http://www.mytaxtime.com.

The Minnesota Society of Certified Public Accountants is committed to serving the public interest with programs that advance the highest standards of ethics and practice within the CPA profession. Tax and financial planning information for individuals and small businesses is available on the MNCPA Web site at http://www.mncpa.org/info. A free CPA referral service is also available on the Web site or by calling 800-331-4288. Founded in 1904, the 9,000-member professional organization includes CPAs working in public accounting, business and industry, government and education.

SOURCE Minnesota Society of Certified Public Accountants

Copyright © 2008, PRNewswire
Copyright © 2008, NewsBlaze, Daily News

Tags: ,FIN,MN-MNCPA-tax-tips

   _   _

           

Is your favorite bookmark site missing? Ask for it.