It’s Tax Time!

April means two things: spring and taxes. Contrary to popular belief, the latter does not have to be unpleasant. Tax season provides you with an opportunity to save money and perhaps receive a nice refund from the government. It also provides an excellent opportunity to organize your finances. Take advantage of these tax tips to make the experience as pleasant – and perhaps financially rewarding – as possible.

Avoid Scams
Unfortunately, tax season encourages scam artists looking to take advantage of unwary consumers. Never respond to an email inquiry from someone purporting to be an IRS agent seeking sensitive financial or personal data. This approach to identity theft usually soars every year around tax time. The IRS does not use email correspondence requesting you to provide any personal information or to log into a website regarding your taxes.

Are You a First-Time Homebuyer?
If you bought your first home during the early part of 2010, you may qualify for a large tax credit – to the tune of thousands of dollars. Military members may qualify for additional first-time home buyer credits. For more information on this program, check the IRS’s official page at: www.irs.gov/newsroom/article/0,,id=204671,00.html

Did You Pay Tuition?
You can deduct college tuition and fees for either yourself or your dependent child. This credit is available for both full and part-time students. The maximum deduction is $4,000, although that number may be further limited by income requirements. The IRS’s official page includes more details:
www.irs.gov/taxtopics/tc457.html

Did You Have Modest Income in 2010?
You may qualify for The Earned Income Tax Credit. According to the IRS, “The Earned Income Tax Credit or the EITC is a refundable federal income tax credit for low to moderate income working individuals and families.” Both employees and the self employed can qualify for this credit if their income fell below a certain threshold. This refundable tax credit could potentially lead to a refund – even if you had no tax withholdings. More information is available on the IRS’s webpage at:
www.irs.gov/individuals/article/0,,id=96406,00.html

Did You Move for a New Job or Start a New Business??
Some moving expenses are deductable. If you relocated more than 50 miles for a new job, you may qualify to deduct those moving expenses. You may also qualify if you started a business in a new city. To qualify, you must be working full-time. The IRS page for this program can be found at:
www.irs.gov/taxtopics/tc455.html

Are You Self-Employed?
Those who are self-employed or members in a partnership may be eligible to deduct health insurance expenses for themselves, their spouses, and their dependent children under the age of 27. To learn more, visit the IRS’s page at:
http://www.irs.gov/publications/p535/ch06.html

Are You an Educator?
With schools enduring record budget cuts, teachers are often resorting to buying their own supplies. Good news for teachers – those expenses are deductable for up to $250. These deductions are available to teachers, instructors, counselors, aides, and principals who worked at least 900 hours during the previous school year. Information about this program is available on the IRS’s webpage at:
www.irs.gov/taxtopics/tc458.html

Consider Using a Tax-Preparer
If you plan on making many tax deductions, you should strongly consider utilizing a reputable tax preparation company. Make sure to do your own research first so that you may inquire about specific deductions and their applicability to your situation.

Free tax preparation services may be available in your area for low to moderate income tax filers. Local United Way offices often offer these services, so make sure to check with the United Way office closest to you.