Income Tax Tips You Need to Know

Most people don't want to think about taxes until they have to - around April 14 or so - but by thinking about tax relief throughout the year, you can increase your tax relief with these income tax tips.  Planning and organizing your taxes throughout the year is an efficient way to keep track of your finances and will make your filing time much easier.

January: Think Charity

Making a one-time large donation to charity often places a burden, formost wage earners. You can get the same tax relief at the end of the year even if you make smaller, monthly donations, to your favorite charity. By breaking down your donation into monthly payments, you can often afford to donate more than you would have otherwise.

February: Get Married

Cupid's arrow is looking for you, and getting married is a great way to improve your tax burden, thanks to joint tax return savings and increased upper limits for other tax deductions.

March: Get Organized

One of the best ways to make sure you can take advantage of all of your potential tax breaks is to have all of the information at your fingertips, so as you start spring cleaning this year, set up a filing system to keep easy track of receipts and expenses that you'll use when you file.

April: Write Off Your Vacation

Deduct your vacation as a portion of your expenses.

May: Open a Retirement Account

Invest in an IRA or 401(k) for tax free earnings and retirement savings.

June: Keep Track of Daycare Expenses

The kids are home for the summer, but you still have to work. Daycare is required and is a deductible. Just make sure you know the tax ID number of your daycare and keep all receipts.

July: Buy a House

If you are a first time home buyer or have not owned a home in the last three years, you may be eligible for a tax credit if you buy a home.

August: Go Back to School

The limits for deducting educational expenses as well as the Hope and Lifetime Learning Credits have been expanded, so now is a great time to go back to school. Not only will you improve your future employment prospects, but the cost of your tuition and education expenses as well as student loan interest can be deductible.

September: Start a College Savings Account

Open a college savings account - and your contributions are deductible!

October: Invest in Equipment for Your Business

If you have a home business, now is the time to buy equipment. You'll be able to write off the expense and reduce your taxable income.

November: Go Green

Whether you need a new oven or a new fridge, shop smart and make energy efficient purchases and take a tax credit that will just about cover the cost of your new appliance. This tax credit provides a direct reduction in the amount of tax you owe.

December: Plan Ahead

It's the end of the year, save yourself a few headaches and pencil in a date in February to start working on your return. You'll save yourself a lot of stress doing it early.

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