You don’t want to pay any more tax that you have to and so here are some tips to help reduce your 2008 tax burden.
1. The 2008 Stimulus Payment that you received last spring or summer is not taxable income to you and most likely you received the correct amount. However, the payment is based on your 2008 tax return and you may be eligible for a larger payment if your income level dropped in 2008, you added a child to the family or you never received your stimulus payment because you filed late. The additional amount will reduce your 2008 tax through the Recovery Rebate Credit. You will need to know the amount of payment that you received in 2008 to figure the credit and if you don’t know that amount you can find out through the IRS website link How Much Was My 2008 Stimulus Payment. The good news is that if your stimulus payment was too high you are not required to pay it back.
2. The biggest mistake made by many taxpayers is not keeping accurate records. If you run a small business, you absolutely need to have good records. Those who make charitable contributions must keep receipts and you must have good documentation on the value of your non-cash charitable contributions. Do you drive your car for business, medical trips or charitable purposes? You can take a deduction for those miles, but you must have good written records of trips that you take and the number of miles per trip.
3. The Earned Income Credit is available to low-income taxpayers who had wages, or self employment income in 2008. The credit varies based on your income and the number of children living in the home. For example, if you worked in 2008, had two children living in your home and your income was below $41,646 you may be eligible for the Earned Income Credit. You cannot have investment income in excess of $3,150 to qualify for the credit. One quarter of all filers who qualify for this credit don’t claim it, so if you think you might qualify be sure to review your eligiblity because it could be worth up to $4,800 in your pocket.
4. Elect to have your federal and state refund directly deposited into your bank account and get your money within 10 days of E-filing your return, rather than waiting four to six weeks for the check to come in the mail.
5. Don’t stress about your taxes. Find a good tax professional to quide you through the tax code and establish a relationship so that you can ask questions that concern you about your tax situation throughout the year. This will take the pain out of filing your taxes and you will be secure in knowing that your return is accurate and complete.