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Income Tax Exemptions

2011 personal exemptions can help you get unclaimed IRS money

With the 2012 tax season less than two months away now is the time to brush up on your tax knowledge. One of the most fundamental things you should know about when filing your return is how to claim income tax exemptions.

An income tax exemption allows you to deduct a certain amount of money from your Adjusted Gross Income, thus reducing the total amount of money on which you must pay taxes. Let’s put it this way: income tax exemptions save you money.

And, as it turns out, the federal government holds on to millions of dollars in unclaimed deductions every year. So it’s important to claim every deduction that applies to you in order to keep all of the money you’re entitled to. Continue reading “Income Tax Exemptions”

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Changes to the Estate Tax for 2011

The death tax is back, but it’s not as high as it could have been

The 2010 tax year isn’t behind us yet. For those who opted for an extension, the deadline is this Monday, October 17. But this should not prevent us from looking ahead to the next tax year. After all, returns can be filed as early as January and many people are already wondering what 2011 tax changes are in store.

The short answer is that there are very few 2011 tax changes at all. Thanks to the dramatic, last-minute December compromise in Congress, the Bush tax cuts were extended through 2012. That means that tax rates will stay pretty much the same (the brackets have only been adjusted slightly to adjust for inflation). Continue reading “Changes to the Estate Tax for 2011”

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How to Lower Your 2010 Taxes

There’s still time before October 17 to save on your 2010 taxes

With the October 17 deadline for 2010 taxes less a week away, you may be wondering what, if anything, you can still do at this point to lower your 2010 taxes. Well, rest assured, there are a few more steps you can take to minimize the amount you fork out to Uncle Sam next week.

Accelerate Your Deduction for Equipment Purchases:

If you are self-employed and purchased equipment, such as computers, software, or furniture, you can deduct these costs when filing 2010 taxes. Normally they are spread out over several years, but if you really want to lower your 2010 taxes, you can opt to accelerate the deduction and accrue all of the benefits this year.

You can accelerate the deduction for these purchases through bonus depreciation by taking a Section 179 deduction. Doing so could mean both lower income taxes and lower self-employment taxes. Just note that while such an acceleration could very well mean lower taxes for 2010, it will also mean a relatively higher tax burden over the next few years. Continue reading “How to Lower Your 2010 Taxes”