Have you over looked these 2006 tax deductions?

By: Academix Tax Planning 1 Follower


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Telephone tax refund – This is a one-time refund and many taxpayers are not aware of its existence. Married couples, with no children, can receive a $40 refund. Those with one child can claim $50 & those with two, $60. If you kept your phone bills for the last three years and the telephone excise tax on your invoices exceeds these credits, you can apply the actual amount.

Child care credit – If you paid for child care while working, you can claim a tax credit on your tax return. It is worth up to $3,000 for one dependent and up to $6,000 for two or more. You must be able to identify the child care provider on your tax return and be able to submit their SSN or Tax ID number.

Education credit – If you attended college last year, you might be eligible for a Hope Credit or Lifetime Learning Credit. You can also deduct up to $2,500 in student loan interest. This amount begins to phase out when modified Adjusted Gross Income (AGI) exceeds $50,000 ($105,000 for Married Filing Jointly).

Saver’s credit – If your AGI is less than $50,000 and you are setting money aside in your IRA or employer-sponsored 401(k), you will earn this extra credit. This credit is actually a reward for your saving efforts.

Alternative fuel vehicle credit – Purchase of one of the certified hybrid vehicles last year will earn you as much as $3,150 in tax credit. The precise amount of the credit depends on the make, model of the vehicle, and when the vehicle was purchased. For details visit http://www.irs.gov/newsroom/article/0,,id=165649,00.html.

Charitable contributions – If you itemize your taxes (Schedule A), do not forget to add all your charitable contributions. If the amount of non-cash property is in excess of $500, Form 8283 needs to be filed.

IRA deductions – Contributions to Traditional IRAs help reduce your taxable income. Even if you or your spouse participated in an employer-sponsored 401(k), you might be able to contribute to an IRA. The amount of deductibility needs to be calculated, so check with your tax preparer. This year’s maximum contribution is $4,000 per person ($5,000 if you are 50 years of age or older).

Please consult your tax, legal, or investment advisor when making financial decisions.

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