To IRA or Not To IRA

That is the question. But it is a multi-part question. The first question is whether or not to make a contribution to an IRA. If you are under age 50, you can make a contribution of up to $5,000. If you are over age 50, you can make an additional $1,000 on top of that.  Do you have the cash to contribute? These days, that is not an easy question for many people. If you have extra cash, then you should seriously consider making the contribution to your retirement. Remember, it does not have to be the entire $5,000. It can be any amount up to $5,000.

Why Contribute to a Retirement Account?

There are several very good reasons to make contributions to your retirement account:

1) You are going to want some fund to draw upon when you retire.
2) If social security is around, it will not provide an adequate standard of living when you stop working.
3) All funds in a retirement account grow tax deferred - that is, you don't pay tax on the earnings until you take the money out.
4) It saves on current income tax every year. The money you contribute would otherwise have been in an investment account earning interest or dividends which would be taxable now.
5) If you are eligible to contribute to a deductible IRA, it saves you on your tax return now.

What Kind of IRA do I Contribute to?

There are two basic kinds of IRA accounts: traditional and Roth.  The traditional IRA can be divided into the deductible and nondeductible varieties.  Anyone with earned income can contribute to a traditional IRA. Earned income is money you earn from working. It does not include investment income or rental income. If you are going to contribute $5,000 to an IRA, you need to have earned at least $5,000.  If you are filing a joint tax return, the income you make can be used to make a contribution for your spouse.  In other words, if your spouse does not work and you make at least $10,000, then you can contribute $5,000 to your IRA and $5,000 to your spouse's IRA.  Not everyone can contribute to a Roth IRA. If your income is above a certain level, then you are disqualified from making a Roth IRA contribution.

Can I Deduct My IRA Contribution?

This simply refers to whether or not you can take a current deduction on your tax return for making the contribution to your traditional IRA. Whether or not you can deduct the contribution is a function of one major factor:  Are either you or your spouse an active participant in another kind of retirement plan? This can be a 401(k), 403(b) or some other employer-sponsored defined contribution plan (defined contribution simply means that the amount you can put in is regulated). If the answer here is "yes", then there are very narrow income limits under which your IRA contribution will be deductible.  Contributions to Roth IRAs are never deductible.

Why Would I Make a Nondeductible Contribution?

Here are a couple of reasons why this is a good idea:
1) It adds to your retirement nest egg.
2) If it's not deductible now, it's not taxable when you take it out. The government gets its money on one end or the other. If you can't deduct it now, that means you are paying tax on that money now.  If you pay tax on it now, you don't have to pay tax on it  later when you take the money out.

Why Contribute to a Roth IRA?

The biggest difference between a nondeductible traditional IRA and a Roth IRA is that there are no minimum required distributions from a Roth IRA at age 70-1/2. Let me say that another way: you..never..have..to..take..the..money..out!!!  You can let it grow your entire life and if you don't need it, it can go to your kids.

Conclusion

It's your retirement. You want there to be as much for you to live on as possible. If you can possibly contribute to an IRA of either kind, you should do so.

I welcome comments and questions on this and all other topics on this blog.

College Credit

Some of you struggling with tuition bills might already be familiar with the Hope credit and the Lifetime Learning credit. The American Recovery & Reinvestment Act modified the Hope credit for tax years 2009 and 2010 and called it the American Opportunity Credit (AOC). It's the new and improved model and it is better.

Comparison                                               
Good for the first 4 years of post-high school     AOC               
Good for the first 2 years of post high school     Hope
Credit up to $2,500 per year                            AOC                
Credit up to $1,800                                         Hope
Credit for 100% of the first $2,000 and
25% of the next $2,000                                    AOC
Credit for 100% of the first $1,200 and
50% of the next $1,200                                   Hope         
40% (up to $1,000) may be refundable            AOC                    
No refundable portion                                      Hope
Tuition and related expenses including course materials     AOC
Tuition and related materials                                             Hope
Phased out at AGI of $80,000 ($160,000 joint)               AOC
Phased out at $50K (100K joint)                                     Hope

 As you can see, the American Opportunity credit gets you a bigger credit faster and more people will quallify since the income limit is higher.  In some cases, the parents make too much money and it is worthwhile to see if the child can take the education credit.  In this case, the parents cannot claim the dependency exemption for the student, but if the credit is worth more to the student, that is a good deal.  In most cases, however, the student between ages 18 and 23 will not qualify for the refundable portion of the credit. They can use the credit to get their liability down to zero, but they will not get the $1,000 refundable part.

The American Opportunity Credit is only good for the first 4 years of post- high school. If you have a professional student, you can consider the Lifetime learning Credit.  The bottom line is this: if you are paying tuition, you have options that will reduce your tax burden. You should explore all of the options to see which one gives you the best tax break.

1099 - Truth or Consequence

By now you should have received most, if not all of your forms 1099.  These are the forms the banks and other financial institutions send you telling you how much income you need to report on your tax return. Are they correct? How do you know? Do you just trust them? You pay tax dollars depending upon how much income they tell you to report. Shouldn't you know if the numbers are right?

Match year-to-date information

These same financial institutions send you a statement every month (if you've gone green and don't get a mailing, that's great, but you need to look at them).  Take the December statement and make sure the year to date number matches the form 1099.  If you use Quicken or some other bookkeeping software, print your own year to date numbers and make sure they match the 1099s.

What if the number is wrong?

If the numbers do not agree with what you think they should be, call the financial institution and have them send you and the IRS a corrected 1099. Please do not ignore the fact that the numbers are different and put your number on the tax return. If you do, the IRS computer matching program will find you and send you a note asking you to explain the difference.

It's your money. Take a few extra minutes to get it right.

Ankle-deep

It's still early in the process and the returns have started to trickle in. As soon as Fidelity and Schwab send the majority of their 1099s, the deluge will start.

Filing Status

I was asked a question yesterday and it occurred to me that all this talk about tax rules, deductions and credits was a little premature. Before any return can be prepared, the threshhold decision to make is what is the filing status.  For most people, especially single people, this is an easy question to answer. If you are single (with no children), your filing status is single. After that, it can get more complicated. If you are married, you can file a joint return with your spouse or you can file "married filing separately".  Most married people don't even think about this one. They simply file married-joint. 

Married - separate

There is an alternative. If you are legally married on December 31 (this is the critical date for this decision), you only have two filing choices - joint or separate.  The tax tables were constructed to discourage married couples from filing separately.  They reach a higher marginal tax rate at a much lower income level.  You also lose the benefit of several deductions and credits. There are, however, non-tax reasons people consider filing separately.  Couples considering divorce may want to separate their tax lives.  One spouse may not trust that the other spouse is being honest in reporting their income.  If you sign a joint return with your spouse, you become liable for their tax liability and their penalties if they get caught.  There is an "innocent spouse" rule, but the spouse truly has to be innocent.  There are actually cases, although they are in the vast minority, where, due to the relative income and deductions of each partner, the combined tax actually comes out lower by filing separately.

Head of household

This is the fourth filing status. It is available to a single (not married) person who provides a principal place of abode for a child or other dependent for at least half of the year.  If you are divorced with a minor child you probably qualify for this filing status. It is a more favorable status than filing single.

December 31

When determining filing status, this is the only day of the year that counts. It doesn't matter what happened on the previous 364 days.  If you are getting divorced, the divorce must be final under state law in the jurisdiction where you live.  One note to those who have tied the knot early in the year. Although they have done much to eliminate the marriage penalty, it woould be a good idea to review the amount of withholding you are having taken out of your paychecks to make sure you are being covered.

Opportunity Season

At my firm we call this time of year "opportunity season".  We do this mostly because we want to emphasize the opportunity to interact with our clients.  They have to have their financials and their tax returns done.  It give us the opportunity to have a face-to-face and perhaps, to cross-sell.

It sounds better than "Internal Revenue Service"

Remember a few years ago when you stopped making your tax checks out to the IRS? This was done mostly because the IRS and any dealings you had with them had such a negative connotation. The government thought it sounded nicer to make your checks payable to the US Treasury. That way, you might think you were actually helping your country instead of some agency you hated.  Calling it "opportunity season" is not much different.  How many people get the warm fuzzies when they hear the phrase "tax season"?

Real Opportunities

I understand the PR behind the switch. I also realize that the opportunities can be very positive. Here are some of the opportunities I see for this season. As an individual tax specialist, I don't routinely go out to clients' offices.  Most of my interaction is over the phone or the internet.

Have a conversation with each client. Even if you have to make up a reason to call them, you should have live voice contact. Over the years, a lot of clients have gotten used to not hearing from their tax preparer. The client sends the information, you prepare the return and mail it to them. No interaction whatsoever. Everyone likes to feel special. A simple 30 second phone call can make all the difference. And no, email is not the same.  For each of the taxpayers reading this, does your tax person do this?

If you have done something to save your client tax dollars, tell them.  A lot of people think tax returns are a commodity. They are absolutely right. What we are selling is not the ability to put numbers in boxes, it is personal service. Yet, we are very bad at letting clients know exactly what we did that makes us different than H&R Block.  Did you call you client last December and have them prepay their state income taxes? If so, you saved them tax dollars on their return. Tell them. This is a very simple example, but that doesn't matter.

Suppose you intentionally did not take a child as a dependent so the child could claim the education credit. The result was that you saved the family unit over $1,000 in taxes. The only thing the client will notice is that this child is no longer listed on page 1 as a dependent. Is that the call you want? Tell them what you did and let them know you are really looking out for them.

Who out there knows how much if anything their tax preparer saved them in taxes. Sure, you got the bill, but what did it buy you?

Absence makes the heart grow fonder

My wife used to joke that "opportunity season" was the opportunity for her never to see me for eight weeks. This was a true statement. I became like the guy in the Dunkin Donuts commercial who gets up at an obscenely early hour to go "make the donuts". I also came home very late.  Again, there is an opportunity here. Did you ever leave your spouse or your kids a note on your way out telling them you love them and wishing them a good day? Don't just grumble that tax season sucks.  You can take a minute and do something nice.

To all the clients and potential clients, this also the reason to get your information in early. Do you want me working on your taxes when my work week is 60 hours or when it balloons to 80 hours?

Other opportunities

While you have your clients' attention, schedule a post-opportunity season meeting.  Tax saving opportunites can happen any time of year. It would be a good thing to check-in during the summer just to see what your client is thinking about.

Everyone at your office works hard this time of year. Tell them they are doing a good job and that you appreciate what they are doing.  All too often we tend to hear it when there is a screw-up. A pat on the back goes a long way.

Final opportunity

For all the tax preparers, tell your clients you appreciate their business and ask them to refer a friend or colleague. For all the taxpaying individuals, tell your preparer you appreciate what they do for you. I used to have exactly one client who would take the time after they received their return to write me a thank you note. A small, but very powerful gesture. I felt truly appreciated. Wouldn't the world be a better place if we all felt that way?

 

 

Alternative Motor Vehicle Credit

This is an update to my blog on the hybrid vehicle credit.  That one should have included this information. The credit is not simply for hybrid cars, although that's what people generally think. The credit also includes advanced lean burn technology vehicles, qualified alternative fuel vehicles, qualified fuel cell vehicles and qualified plug-in electric drive vehiicles. The credt for any of these is taken on form 8910.

Advanced lean burn technology vehicles

This has something to do with the way the internal combustion works, but I don't begin to understand it. Your dealer can tell you whether the car qualifies as such. Right now, the only companies making cars that qualify under this section are Audi, BMW, Mercedes and Volkswagen.

Qualified alternative fuel vehicles

These are vehicles fueled solely by compressed natural gas, liquefied natural gas, liquefied petroleum gas, hydrogen, any liquid at least 85% methanol, or a mixture of any of these and a petroleum based fuel.

Certification

The dealer can tell you whether your car qualifies and which credit it qualifies for. For certain models, there is a credit available for only a limited number of cars. For certain credits, a different amount is available as a credit for different model cars. You must own the car (leases do not count) and the original use of the car must have begun with you.

Practical Tax Season Tips

Now that tax season is truly upon us, I thought I'd share some practical tips on preparing and filing your returns correctly.

1) Make sure the payor named on your 1099 matches the entry you make on your return. Especially these days when some banks disappear and new ones take their place, don't just proforma what the entry was last year.
2) Make sure you sign and date your return before mailing.
3) If you receive a 1099 that you think is wrong, call the payor to get it corrected. If you just enter the amount you think is right and it is different from what is reported, you will generate a notice from the IRS.
4) Double-check for all the credits to which you are entitled. This year there is a new credit called the Making Work Pay Credit. If either spouse works and the couple makes less than $150,000, you get this credit. Single people making less than $75,000 get this credit.
5) Don't procrastinate - organize and prepare early.
6) If you owe money and don't have it, attach form 9465 and ask the IRS for a payment plan. For amounts less than $25,000 these are routinely granted.
7) If you have questions or need some forms, go to the IRS website: http://www.irs.gov/
8) There are a lot of scammers this time of year. Please note that the IRS wil NEVER send you an email.
9) Ask all the tax bloggers questions. We have boatloads of information and we want you to get it right.
10) Last, but not least - if you have a significant other in the tax preparation business, please be patient with them and tell them you love them. They don't really want to be working those horrendous hours, but it's what they do... and they miss you, too.

Interstate Employees

The snow is coming to New England this afternoon.  Actually it's hitting a lot of the east coast. This seems like the perfect time to give a great tax tip to those employees who live in one state and work in another state.  The rule about which state(s) get to tax you is pretty simple. If you live in a state, they get to tax everything no matter where you earn it. OK, you say, but then if I work in another state, they get to tax it too? Well, yes. The state where you actually do the work gets to tax the income earned in their state. No way! That would be double taxation! Yes it would. That's why the state you live in gives you a credit for the taxes you pay to the other state. That eliminates the double taxation issue. But that's not what this entry is really about.

APPORTION YOUR INCOME

Suppose, for example, that you live in a state like New Hampshire, where there is no personal income tax on wages. If you work in Massachusetts, you would simply pay Massachusetts tax on the income earned in Massachusetts. If you are a full-time employee, your W-2 will most likely show all of your income earned in Massachusetts. Let's suppose you have clients that you service in New Hampshire, Vermont and Maine. Or, like today, since the blizzard is coming, you decide to work from home. At the end of the year, you would add up all of the days you worked outside of Massachusetts and come up with a percentage of days you worked outside Massachusetts. Very simply, you would then apply this percentage to your wages and exclude that amount of income from your Massachusetts taxes. This also works really well if you live in Connecticut or New Jersey and work in New York. You need to keep a calendar to track your days, but you could save hundreds of dollars in state taxes.

Who Is A Dependent?

You may have thought this was a simple question. Of course, you say, my kids are my dependents. You are probably right, but it happens to be more complex than that. The correct answer may depend upon how old your kids are and how much money they make. You may even have dependents who are not your kids.

QUALIFYING CHILD

In one of the tax acts a couple of years ago , the test for a dependent was split into two categories: "qualifying child" and "qualifying relative". In order for a person to be a "qualifying child", they must pass all 4 of the following tests: 1) relationship (to the taxpayer) - a) son, daughter, grandchild; b)  brother, sister or child of the brother or sister. This also insludes adopted or foster children. 2) age - they must be younger than the taxpayer. 3) principal place of abode - they must have lived with you for at least half the year. 4) support - the child must not have provided more than half of their own support.

QUALIFYING RELATIVE

If the child fails the qualifying child test, they may still be a dependent if they pass all 4 tests to be a qualifying relative. 1) relationship - this is the same as the one above, but also includes: father, mother or grandmother; neice, nephew; aunt, uncle; all in-laws; any other individual that was amember of the taxpayer's household;
2) gross income - the individual cannot have earned more than $3,650; 3) support - the taxpayer must have furnished over one-half of the individual's support for the year; 4) dependency - the individual must not be a qualifying child of the taxpayer or any other taxpayer.

Clear as mud? Just follow the tests above for the child first. Then if you fail that test move to the relative test. Please note: in order to take a dependency exemption for any person on your tax return, that person must have a social security number.

Making Work Pay Credit

Yes, it's Saturday morning and I'm in the office. This is the onset of the 6-day workweeks.  It lasts about a month and then we go to the 7-day workweeks.  No, I'm not looking for sympathy. This is just the winter/spring life of a tax guy.

Now that filing season is officially underway, there's been a lot of talk about this new credit.  The credit is $400 for working individuals and $800 for working couples.  The credit is actually calculated at 6.2% of earned income up to the $400 credit per individual, but will begin to phase out at $75,000 of modified AGI for a single individual and $150,000 of modified AGI for a married couple. Please note that for a married couple, only one spouse needs to work and they will receive the full $800 credit as long as the total earned income is at least $12,904.

Those individuals receiving certain retirement benefits such as social security, supplemental security income, railroad retirement or veterans benefits should already have received a $250 check from the government (not from the IRS) and their credit will be reduced by that payment.

OK, this is supposed to be taxes in plain English. Did everyone understand the above?  Bottom line - if you worked last year and made at least $6,452 ($12,904 for a joint return) in earned income, you will get a $400 credit ($800 for a joint return) as long as your total income did not exceed $75,000 ($150,000 for a joint return) and you did not receive social security benefits.

What You Can Do Now

OK, it's the first week of February and the light bulb has lit up. You realize you have to deal with your taxes, but know you didn't plan for them.  You ignored them for about an entire year - since the last time you went through this ritual you hate.  Your first thought is probably, "oh ___!!" After that, you need to understand what you can do now to minimize your tax liability.

CASH BASIS TAXPAYERS ARE SCREWED, RIGHT?

No. But your options are very limited at this point in time. All individuals (with very few exceptions) are cash basis taxpayers.  That means you recognize income when you get the money and you get a deduction when the cash goes out.  The big exception to this rule is that the government allows you to make contributions to your IRA until April 15. If you have a profit sharing plan and put your return on extension, you have until October 15 to make your retirement contribution.  If your income falls into a certain range, you will also get a tax credit for making this contribution.  That's really huge - a deduction and a credit for the same dollars!  You can contribute up to $5,000 to your IRA ($6,000 if you are at least age 50).  Remember that the government is subsidizing the deductible contribution. The $5,000 doesn't really cost you $5,000 because it is reducing your tax liability.

CASH IS TIGHT, I JUST CAN'T DO THAN NOW

If you don't have the cash, here are some things to think about. Things happen during the year for which you already spent the cash. Now, see if you can use any of them to your tax advantage.

• Did you replace your hot water heater? Think energy credit.
• Did you replace windows or exterior doors? Think energy credit.
• Did you look for a new job? Think job hunting deductions.
• Did you start your own business? Think home office deduction.
• Do you have a child in college? Think education credit - for you OR the student.

If cash is tight, think about cleaning out your closets.  You can give your old clothes, toys, furniture, books, etc. to charity.  It won't get you the deduction for 2009, but you'll have this deduction in the bank for 2010.

Remember, even if you think you might owe taxes, prepare early. Find out what the damage is, see if you can mitigate it with any of the above and then plan for taking care of it.  Don't wait for the surprise on April 15.

Taxes Can Be Funny

Actually, no one thinks taxes are funny.  But, if all I did here was spout tax code, you'd all be pretty bored and you would never read my blog. I want to provide helpful information in a way ordinary people can understand.  Most people hate this time of year.  Just the thought of doing their taxes can make most people want to wash the cat or clean the toilet instead. Anything except their taxes.  I just want to do my little part to help ease the burden.

Actually, sometimes taxes can be funny, in a wierd sort of way.  Remember Leona Helmsley? She had gabillions (yes, that's a technical tax term), but thought she was above the law and didn't need to pay taxes. Or Richard whatshisname from the first Survivor show? He won a million dollars on worldwide television and then thought he didn't have to pay tax on it. Now that's funny!!

It's funny when it's someone else's tax problem.  It is a voluntary system, but we all have to volunteer. Since we have to do it anyway, I hope I can relieve the stress level just a little.

Stay tuned.

Hybrid Vehicle Tax Credit

Was anyone angry when a Japanese car manufacturer became the number one selling car maker in America?  A lot of us thought that the US car manufacturers simply weren't making a product which could compete in the global marketplace. Nobody is smiling when people get hurt and killed when a car malfunctions. There are many now who are simply looking for a car they can trust.  If you can do that and go green and get a tax credit, you get the best of all worlds.

There are still many US-made cars which qualify for the tax credit.  The following is a non-inclusive list of 2010 model year hybrid vehicles which qualify for the tax credit. Ford makes the Escape and Fusion, although for the full credit these need to be bought before April 1, 2010. There is also the Chevy Malibu, Silverado and Tahoe. GMC has the Sierra and Yukon models which also qualify. I have not listed the foreign manufacturers, but many have hybrid vehicles which qualify. If you wan to know, you can call the dealer or visit the IRS web site at http://www.irs.gov/ .

In order to qualify for the credit, the car must be purchased new and must be placed in service prior to December 31, 2010. If you lease a car, you are not eligible to take the credit. Unlike many other credits and deductions, there is no income limit on this one. Anyone, regardless if earnings, can take this credit if they otherwise qualify.  If your Toyota now makes you nervous or you want to move into a hybrid vehicle, remember there is tax money available.

Most of all, drive responsibly. No cell phone and no texting. Distracted drivers now cause more accidents than drunk drivers.  We can all do our part to make it safer on the roads.

Prepare early...file??

The forms 1099 are on their way.  The annual rite of passage into tax season. You have already received some of them, and except for some brokerage houses, the rest should be arriving very shortly.  If you did a tax projection for yourself prior to the end of 2009 and you know you are getting a refund, file early.  It's your money. Get it back as soon as you can. If you have no idea whether you are getting a refund, prepare early. Don't be afraid that you might owe money and let that paralyze you. It's better to find out now than early or mid-April.  If you find out now that you owe Uncle Sam and Uncle Arnold or Uncle Deval or any of the other 41 Uncles who run states with income taxes, then you have about 10 weeks to save for it.  You don't want to get the surprise of owing tax dollars just prior to midnight on April 15 when there's nothing you can do about it.

WATCH OUT FOR PENALTIES

You can't decide at the last minute to file an extension because you owe the money, but don't have it. Please remember that an extension is just an extension of time to file, NOT an extension of time to pay.  If you think you owe it, the government wants it by April 15.  In fact, if you owe it, there's no good reason to give it to them any sooner than that. If you owe it and don't pay it, the government can charge you both penalties and interest.  If you owe taxes with your return and you simply do not have the money and you have no way of getting the money on time, file the return on time anyway.  There are penalties for late filing and for late payment. By filing on time, even without the money, you can avoid the late payment penalties.  You can also ask the government for a payment plan.  depending upon the amount you owe, you can attach a form requesting the payment plan. Otherwise, you can contact the IRS and they can help you set up a plan. With some states you can even request the payment plan on-line.

WHAT TO DO NOW

If you need forms or assistance preparing the returns, you should try the IRS website: http://www.irs.gov/
It has all the forms and instructions you need.  For now, assemble all of your information, making sure you have all items of income and expense accounted for.  All items of income should be reported, even those for which you do not get an official reporting form. Make sure you take all the deductions and credits to which you are entitled. See my top ten tax tips for some items you don't want to forget.

Refunds are good??

I hear it every year.  Don't you? People love to brag about their big tax refund.  Sure, it sounds good. Then you need to stop and think about it for a minute. Do you realize that you have just given the government an interest free loan for the past year? Your employer took taxes out every paycheck and sent them to the government. The government used them for the bailout and then waited for you to file your return to give you back what you overpaid. There's a better way. Have less taken out from each paycheck. Have the extra automatically transferred to a savings or money market account. That way, you get to keep your extra money. If you don't need it along the way, great. If you do, you don't have to wait a year to get it back.

I understand some people like to save at the bank of Uncle Sam, but he pays even less than your neighborhood bank. You should control your refund. All you need to do is fill out a new form W-4. The higher number of exemptions you claim, the less tax dollars that get taken out.  Just don't take out so much that you end up underpaid.  Figure it this way.  If your refund last year was $1,000, chances are this year it will be about the same. For most people, one tax year looks very much like another. If nothing different happened, your refund for this year is likely to be close to what it was last year. That $1,000 refund is about $20 per week. You don't even have to change the number of exemptions. Simply complete the new W-4 and ask your employer to take out $20 less per week.  Then go to your bank and set up an automatic transfer from your checking account to your savings account. You should also know that you can fill out a new form W-4 as many times as you want. There is no annual limit. If what you're doing isn't working, change it.

Remember, it's your money. Especially in these tough times, you need to watch it very carefully.

Hello Tax Fans!

Okay, so you're not really a tax fan. I get it. You just want some information about what's happening for the next 10 weeks. That's why I created this blog. I wanted to share some tax information you could actually read and understand and I wanted you to be able to ask me questions.

I'm going to start you off with my top 10 tax tips for individual taxes. I'll talk about each of them and more in the days to come.

What’s the Buz…

Here’s the Buz on…Individual Taxes

Buz Aaron’s Top 10 Tax Tips

1. Make retirement contributions – IRA, 401(k), SEP-IRA, Profit Sharing

2. Tuition credits – make sure the right family member takes them

3. Deduct job hunting expenses

4. Take a home office deduction

5. Clean your closets – donate clothing and household goods to charity

6. Challenge your property tax assessment

7. Other credits – first-time homebuyer, retirement savings, energy

8. Convert your traditional IRA to a Roth IRA

9. Have taxes withheld on unemployment benefits

10. Deductions for nonitemizers; sales tax on new car, real estate taxes

Bonus tip…

11. Plan your refund – adjust withholding on form W-4