The Best Way to File Your Tax Return

Last Revised on January 3, 2010

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Here are some of the best tax moves you can make to make your tax filing process smooth and easy:

Be Careful with the ‘kiddie tax. Know that kiddie tax isn’t a tax break for young earners. It is to keep parents from moving assets to a child’s name as a way to avoid the adults’ higher tax rates. Under the kiddie tax, a child’s unearned income is taxed at their parents’ highest tax rate. More kids are going to face this tax.

Save On Electricity and other Energy power. tax writers have started environmental act – energy conserving home improvements are still available for a tax credit this year. You also can still get some tax breaks for buying a fuel-efficient hybrid auto, as long as it’s not a Toyota. The tax credit for Toyota automaker’s hybrids was phased out last year. But savings of up to several thousand dollars remain for dozens of other makes and models. Check with your tax consultant for latest rule changes.

Think about retirement.  You can contribute up to $15,500 to your 401(k) or similar employer-sponsored plan. You can add another $5,000 if you’re age 50 or older. Even if you have a 401(k) at work, consider opening an IRA or contributing to an existing account. You can also put like $5,000 into a Roth or traditional IRA and another $1,000 if you’re 50 or older.

Pay the appropriate tax amount on time. Under the IRS’s pay-as-you-earn tax system, you should be paying just the amount of tax owed on your income. To do so, you might need to adjust paycheck withholding, either up or down. A good measure is last year’s tax return. Did you end up owing or get a huge refund? If you did, then you need to tweak the Form W-4 you gave to your boss. The IRS has an interactive withholding calculator that can help.

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One Response to “The Best Way to File Your Tax Return”

  1. Aaron Wakling Says:
    January 17th, 2008 at 12:15 pm

    I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.

    Aaron Wakling

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