Finding Tax Breaks
In this article we will be taking a look at some of the tax breaks which a person can use to reduce what they actually pay to the tax man when filing their income tax return each year. It may also help them to actually get some money back from the tax man instead. Below we provide a list of some tax breaks that a person may find well worth considering before they actually end up filing their tax return.
1. Be Energy Efficient
If you make your home more energy efficient you can in fact earn yourself a tax break. If you decide to install either photoelectric panels or solar water heating in your home then you can take a 30% credit (or up to $2,000) of the cost of your tax return. Plus if you decided to have energy efficient windows installed then you will be entitled to a credit of $200 on your next tax return. Unfortunately you can not include within these figures the cost for the labor.
2. Get credit for saving
Saving for your retirement through the use of a plan such as a 401k, Roth IRA, Traditional IRA or a 403b will help to provide you with a much lower tax bill. If you are making contributions of up to $2,000 on your retirement plan then you can well be entitled to a credit of 50% on your tax return. Plus this credit will be additional to the deduction that is made to your tax payments if you are making contributions to such plans. Plus it is also good to remember that any earnings or interest your plan makes are completely tax free as well.
3. If you are self employed and saving
If you wish you can contribute up to 25% of your income as a self employed person. But it is your gross income we are talking about here minus any expenses that you may have into a Simplified Employee Pension (SEP) and this amount can then be deducted from your tax return. Plus you are allowed to create and then contribute to this type of pension plan up to the date of when your return is due. In some cases this could end up meaning that your return is not actually due until 15 October 2007. Look at the various extensions you may be able to qualify in order to file your tax return at such a late date.
As well as the tax breaks shown above there are plenty of others you may well want to learn more about. For instance you could save on your travel costs when attending job interviews and also claim deductions for the use of your home phone for your business, plus many more. |