Saturday, January 26, 2013
Three Simple Ways To Get a Bigger Tax Refund If you're an early bird, you'll be able to start filing your federal income in less than a week - and you'll want to make sure you can claim all of the tax breaks you deserve. After the late tax law changes enacted on January 2, the Internal Revenue Service had to update forms and processing systems. But starting January 30, the vast majority of tax filers - more than 120 million U.S. households - should be able to start filing their taxes either electronically or with paper returns. Here are three tax easy ways to cut down your tax bill and potentially get a much bigger refund: State sales taxes You have the choice of which to deduct on your federal return: your state sales tax or your state income tax. You can pick the one that gives you the biggest deduction. This was a perk that expired at the end of 2011, but it's back now for your 2012 taxes! If your state doesn't have an income tax, it's a no brainer: write-off your state sales taxes. If you live in a state with an income tax, crunch the numbers on the sales tax calculator on the IRS website to figure out which will give you the biggest break. Job-hunting costs If you were looking for a job in 2012, I hope you kept track of your job-search expenses, including the cost of printing resumes, business cards, mailings, employment-agency fees, food, hotels, cab fares, and travel. That's pretty much everything related to your job hunt. You can even deduct 55 cents per mile for driving your own car to a job interview, plus parking and tolls. If you were looking for a position in the same line of work, these job-hunting expenses are considered "miscellaneous expenses" and are deductible -- as long as you itemize and your total miscellaneous expenses exceed two percent of your adjusted gross income. Out-of-pocket charitable deductions Don't forget to count up your little philanthropic gestures in 2012 as well as big charitable gifts. Look at all of the out-of-pocket expenses that you paid for while doing work for a charity. The pizza, drinks, and desserts you bought for a fundraiser at your kid's school count as a charitable contribution. If you drove your car to Girl Scout or Boy Scout activities or events with another non-profit organization that you are involved in, you can deduct 14 cents per mile, plus parking and tolls. You'll may soon find your little charitable contributions add up quickly. Just make sure you have documentation to back up these deductions before you file your return. Once you've whittled down your tax bill, filing electronically is the safest, fastest and easiest way to submit your return. You with these deductions, you may find you'll get back a refund that's even bigger than you expected. If Uncle Sam winds up owing you money, the IRS says you'll get your refund much faster if you e-file and request direct deposit.