Tax Breaks You May Not Know About

taxesOkay, admit it...have you done your taxes yet, Miss Procrastinator? Okay, not saying that I'm raising my hand to this, but...


Well, for those of us that haven't, we can take advantage of these tax break tips that Woman's Day has given us (take that all you proactive folks):

1. Making Work Pay Credit
Thanks to this credit, you may have noticed a bump in your paycheck last spring. Come tax time, you’ll need to fill out a Schedule M form, says Mark Steber, chief tax officer at Jackson Hewitt Tax Service Inc., which is based in Parsippany, New Jersey. Doing so offsets the extra money you’ve already received—and ensures you won’t have to pay back Uncle Sam.

2. Eco-Friendly Changes
Did you make improvements in 2009 that rendered your home more energy efficient? Maybe you added insulation or installed a new hot water heater? If so, you may qualify for these credits, says Steber, which are worth up to $1,500, depending on how much you spent. To take the credits, you’ll need to fill out a 5695 form.

3. Non-Cash Charitable Contributions
“Cash isn’t [always] king when it comes to charitable donations,” says Jacquelyn Tracy, a partner with Mandel & Tracy LLC, a certified public accounting firm in Providence, Rhode Island. You can also get deductions for donated furniture, clothing or household items, and for “mileage for charitable purposes,” which applies to parents with children in the Boy or Girl Scouts and people who do other charity work that involves driving. If you give goods to an organization like Goodwill, get a written agreement that details the donation: “10 shirts of good value” not “a garbage bag of clothing.” Itemize your donation on a Schedule A form, says Steber; if it’s worth more than $500, fill out an 8283 form, too. For donations worth more than $5,000, such as land or automobiles, you’ll need to keep a written appraisal of fair market value.

4. Retirement Fund Contributions
Meant to boost the savings of people with moderate income, this credit rewards those who contributed to their retirement savings, says Steber. To qualify, singles must make less than $27,750; married couples, less than $55,500. The credit is equal to $1,000 or $2,000, respectfully. Fill out an 8880 form to take it.

5. Contributions to an IRA
Depending on several factors, including the amount of your income, you may have a second chance to be rewarded for retirement contributions, says Tracy. This deduction is an above-the-line deduction, which you would take on line 32 of your 1040 form if you qualify. Above-the-line deductions adjust the amount of your gross income.

Check out the rest of the tax break tips on Woman's Day's website.

Have you done your taxes? Did you know about these tax breaks?

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