Hey Rhode Island, Here Are 3 Tax Time Tips

Hey Rhode Island, Here Are 3 Tax Time Tips

It’s everyone’s favorite time of year again – Tax Time! You get to gather all of your W-2’s, 1099’s, interest statements, mortgage documents and charitable contributions into one big pile and then throw them into your tax preparer’s lap. If you’re your own tax preparer, you’ll be throwing these papers at yourself, so be sure to duck. Here are three quick tips to make tax time tantalizing and tear-free:

Attempt to Itemize

A large number of tax filers will miss out by claiming the “standard deduction” when they would have benefitted by itemizing their deductions. Even if you don’t think it will help, fill out a Schedule A just to be sure. There are miscellaneous deductions and medical expenses that may just put you over the top. You may also be able to claim almost $1.00 as a charitable contribution for that Randy Moss jersey you gave away after this past season.

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Take advantage of all available credits

The First Time Homebuyer Credit expired last year, but is available to those that had a valid agreement before May 31st and closed by September 30th. You may also have a child care credit - this provides up to $1,050 per child or $2,100 for two or more children under age 13 up to a maximum of $6,000. And, finally, the Energy and Appliance Tax Credit allows you to deduct 30% of the cost (up to $1,500) for a variety of energy improvements in your primary home. Credits reduce your tax liability dollar for dollar, so make sure you account for each one you qualify for.

Defray the cost of college

The 2010 Tax Act included a new deduction for families with college costs. Every family can deduct up to $4,000 of college tuition and fees in 2010 and 2011. Also available is the “American Opportunity Tax Credit”, which provides a student with a $2,500 credit for cost of qualified tuition and related expenses. This credit is phased out for those whose federal income tax return has a modified adjusted gross income of $80,000 or higher ($160,000 for joint filers).

Dan Forbes is a regular contributor on business financial issues. His office is in Providence, RI. He leads the firm Forbes Financial Planning and can be reached at [email protected]