Saturday, February 20, 2010
I want to welcome my friend, Melissa, to the blog! She is here to share some great money saving tips for tax time. Perfect timing! Thank you, Melissa for being willing to share with us!
Everyone seems to always dread tax time but you don’t have to. Right now there are a lot of tax credits and deductions that can help you get the most out of your tax return. One example is if you purchase a home for the first time by April 30, 2010 you may qualify for the First Time Homebuyer Credit. Also, the Making Work Pay Tax Credit is another credit that is good for 2009 and 2010. The Making Work Pay tax credit is similar to the other credits they gave us when they mailed us checks. Except this time instead mailing us checks they adjusted the withholding tables hoping we would spend the money instead of paying off debt or putting it in savings. That is what a large percentage of people did when they mailed out the checks. Sometimes this is a little confusing, let me explain. If you work two jobs or if you are married and you and your spouse work you may need to adjust your withholdings with your employer. When this credit was put into effect the IRS adjusted the withholdings on your paycheck. So if you work two small jobs or if you and your spouse both work then when you add both incomes together it might make a larger income, in turn making a situation where not enough taxes were taken out of your paycheck.
Ideally when you or someone else does your taxes you should get no refund and owe no taxes. If you end up getting a large refund from the IRS then it is as if you loaned the government money with no interest. Also if you owe them a large some of money you will be penalized for not giving the government enough. To figure out what you should have deducted from your paycheck each pay you can use the IRS Withholding Calculator. The information you will need to know to use this is your current paystub and a couple of numbers from your last years tax return. This calculator will let you know if you are possibly getting a refund back next year and how much it would approximately be, or if you will be owing the IRS next year and how much that would be. It will also tell you what you should be having withheld from your paycheck so you can come out about even next year. I have used this for the past couple of years and I have come out very close. Here is the link for the calculator-
Melissa is a wife and a stay at home mom of two beautiful children. She went to school for accounting and has been helping friends and family with taxes for many years and decided to do it as an income just recently. She and her father started American Tax & Bookkeeping last May. You can check them out at http://americantaxand-bookkeeping.com/default.aspx
Money Minute - Tips for Tax Time