- Days left
Tax deductions

By Susie Poppick

Before you start planning for 2013, you still have 2012 taxes to worry about. Take these three steps to keep your bill as low as possible.

Enjoy Returning Favorites

The tax deal brought back dozens of expired credits and deductions, making them retroactive to 2012.

You'll again be able to deduct state sales taxes instead of income taxes -- a good move if you live in an income-tax-free state.

Homeowners can enjoy a 10% credit, up to a max of $500 over your lifetime, for energy-efficient upgrades, such as insulation.

"It can pay big to pull back out old 2012 receipts, bills, and tax documents you thought you wouldn't need," says Chicago CPA David Elyashar.

With the American Opportunity credit and the tuition deduction both back for 2012, you'll have a few ways to defray the high costs of college. You can't, however, take both in the same tax year.

A credit that offsets your tax bill dollar for dollar is more valuable than a deduction. So claim the AOC if you can (incomes up to $180,000 for marrieds, $90,000 for singles).

Shelter More Income

You can contribute to an IRA or health savings account for 2012 right up until April 15. By funding a Roth IRA or a Coverdell education savings account you won't lower your tax bill, but you'll lock in tax-free income.

Dig Deep for Deductions

Double-check if you spent enough on health care to qualify for the medical deduction. You can write off costs that exceed 7.5% of your AGI. That threshold rises to 10% in 2013 for filers under 65.

Did you give stuff to charity? You can deduct the fair market value, but you must file a Form 8283 if it adds up to more than $500 worth of goods. An IRS watchdog recently reported that 60% of filers who take that deduction get it wrong.

Photo Credit: DailyFinance

More From CNN Money:

Increase your money and finance knowledge from home

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

Getting out of debt

Everyone hates debt. Get out of it.

View Course »

TurboTax Articles

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

Tax Tips for Uber, Lyft, Sidecar and other Car Sharing Drivers

When you're a driver for a ride-sharing company such as Uber, Lyft, Sidecar, or other car sharing service, the most important thing to understand about your taxes is that you are probably not an employee of Uber, Lyft or Sidecar. Drivers for these companies are usually independent contractors, a fact that has tax implications, both at filing time and year-round.

Add a Comment

*0 / 3000 Character Maximum