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Tips for saving on taxes...
Does tax time have you scrambling for financial cover?
Here are a few tips that you can use to save on your 1996 taxes.
- Set aside a portion of your income and deposit it into a tax deductible Individual Retirement Account (IRA), or a 401K plan. Each dollar that goes into one of these accounts reduces your income by the same amount. These investment earnings remain tax free until you retire or withdraw them. You can make this deposit any time before (April 15, 1997) and still get credit for the 1996 tax year.
- Categorize your charitable contributions as: cash, depreciated property (such as used household items), or appreciated property, (such as stocks or bonds.) If you gave a cash donation, every dollar contributed is tax deductible. If you donated depreciated property like used clothing, record the current actual value and the method you used to determine that value. Remember, when you contribute depreciated property, you receive far less than your original investment. You can get a good idea of the market value of certain used items by going to a thrift store and checking prices. If you donated a used car valued at more than $500, you need to get a special form from that charity. If the car was worth more than $5,000, be sure to include a certified appraisal. If you donated appreciated property, like securities, you can deduct the market value of the securities on the day the donation was made, but you do not have to recognize the capital gain that you would have received on those securities.
Even if the above ideas seem to only reduce your tax payments by a small margin, try to be as resourceful as possible. The degree to which you can save may surprise you.
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