Saving for Your Retirement

Certain taxpayers are eligible for a tax credit

If your adjusted gross income is less than $50,000, you may be eligible for a nonrefundable credit against your income tax for elective contributions you make to §401 (k) plans, §403(b) annuities, §457 plans, SIMPLE or simplified employee pension (SEP) plans, traditional or Roth IRAs, and voluntary after-tax employee contributions to a qualified retirement plan or a 403(b) annuity.

The amount of your credit can be as much as 50%, 20%, or 10% of your contribution depending upon your filing status and modified adjusted gross income, giving you a maximum annual credit of $1,000 ($2,000 if married filing jointly).

This credit was due to expire at the end of 2006; however, recently enacted legislation made this credit permanent. After 2006, the adjusted gross income limits will be indexed for inflation, making more taxpayers eligible for the credit.
 

Tax Tips Small Business

Deducting the Business Use of Your Home

Don't overlook your home office

If you use a portion of your home for business, you may be able to take a home office deduction whether you are self-employed or an employee. Expenses that you may be able to deduct for business use of the home may include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting, and repairs. Read more...

Small Business Quick Tip

If you are disposing of property used in your business, you may want to consider a like-kind exchange to defer the taxable gain on the sale.
Saturday, 19th May 2012
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Tax Tips Personal

Divorced?

Know the rules before claiming a dependent

If you are a divorced or separated parent, the rules for determining which one of you can claim the children as dependents is confusing at best. A few years ago, the IRS created rules that provided a uniform definition of a child for purposes of claiming certain tax benefits such as the head of household filing status, the child tax credit, the dependent care credit, arid the earned income tax credit. Read more...

Personal Quick Tip

It doesn't appear that a college education will get cheaper any time soon. Look into establishing a qualified tuition plan for your children. The earnings in the account grow tax-free. As long as the funds are spent on qualified education expenses, there are no tax consequences. Plus, there may be an added tax benefit at your state level.