Don’t Miss These Tax Breaks, Part 3

Written by nickel - 3 Comments

Okey-dokey… Here’s the third (and final) installment of tax breaks that you don’t want to miss…

Move what you can above the line.
An above-the-line deduction (e.g., alimony you paid, business expenses, stock losses up to $3,000, deductible IRA contributions) reduces your gross income, and therefore your adjusted gross income (AGI).

Since eligibility for most “below-the-line” deductions – which you take only if you itemize — is tied to AGI limits, lowering your AGI will increase your chances of being eligible for other tax breaks.

Here again, there’s not much that my family can do, but check out the article if you want some tips on how to take advantage of this.

Indulge your inner procrastinator if you must.
Sure, there are three months until April 15, but if that’s just too tight a timeframe for you, this year you’re allowed to apply for a free, automatic 6-month filing extension, no questions asked.

Sound too good to be true? It is. The extension is only for filing, not for paying. So just file your taxes already. You’ve got plenty of time between now and April 15th.

See also: Tax Breaks, Part 1a and Tax Breaks, Part 2

[Source: CNN/Money]

Published on February 15th, 2006 - 3 Comments
Filed under: Taxes
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Comments (scroll down to add your own):

I love the above-the-line writeoff for business operating losses. (Not nearly as much as I hate having run the business at a net operating loss in ‘05 and not even bagging the client I spent all that money wooing…but at least it drastically cut my tax rate, made me eligible for the retirement savings credit, and got me back most of the money I sent to Washington and all of what I sent to Springfield last year.)
Comment by Matt — Feb 18th 2006 @ 6:09 am
It’s worth noting that while filing for an extension is “free”, interest will be owed on any taxes due.
Comment by Jeremy — Feb 18th 2006 @ 7:39 am
The payment of taxes owed is still due April 17th - you can send in money I think to avoid the interest penalties.
Comment by jim — Feb 19th 2006 @ 1:18 pm