How to save on taxes page 1

E-filing your taxes

For those who don't work for themselves and have a simple tax filing situation, then they can save money and do it themselves.
E-filing will help you to get your tax returns sooner. Look at the different kinds of software that is designed to assist you to do tax preparation.

There are nice accounting software programs that can save you a ton of time. Look carefully at the specs on the tax prep software and take the time to read what it can do for you before you buy.

Programs differ in value and cost.

Here are a few little used tax savings deductions:

College tuition for the family

You may qualify to deduct thousands that you paid for college tuition .
It can be for yourself or your spouse or a dependent.

It may be advantageous if your income is too high to qualify to claim the "Hope or Lifetime Learning" credit.

You can claim this deduction whether or not you itemize, but you cannot use it to deduct for room and board, personal, living, or family expenses.

Educators Expense

School Teachers, teachers aides, school principal, instructor, counselor $250 educators' expenses.

This applies for those who work with Grades K - 12

You can deduct up to $250 spent for books and classroom supplies. Look to line 23 of the IRS Form 1040 or on line 16 of IRS form 1040A.

If you qualify, (you have to work at least 900 hours a year) you get this deduction regardless of whether you itemize.

Student loan interest paid by parents

Previously if, parents managed to pay a child's student loan, there was no tax break.

To get a deduction, the law held that you had to be both liable for the debt and actually pay it yourself.

As a change, now there's an exception.
If parents pay off the loan, the IRS considers it as though they gave the money to their child, who then paid the debt.

A child who's not claimed as a dependent can still qualify for a deduction of up to $2,500 of student loan interest paid by their parents.

A bit of info from the IRS:

American Opportunity Credit

(The American Opportunity Tax Credit, which was to expire at the end of 2012, was extended through December 2017 by the American Taxpayer Relief Act of 2012.)

The American Opportunity Tax Credit has been extended through December 2017.

Read the details because, they may have changed since this writing.
Read here at the IRS website.

This new credit is a modification of the existing Hope Credit. This makes the Hope Credit open to more people.
Qualified expenses are expanded to include required course materials.

Now you can claim the credit for 4 post secondary years of education up from the previous limit of two years.
There is a maximum annual credit of $2,500 per student.

To get the full credit, you have to have a modified adjusted gross income of less than $80,00 a year for a single person, or $160,000 for a married couple filing a joint return.

Above these limits, the credit isn't available.

The advantage is that these income limits are higher than under the existing Hope and Lifetime Learning Credits.

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