Tax Tips: A Guide to Your 2005 Taxes
Making Sense of the Tax Code Can Help You Save Money
IRS Short Forms If you make $100,000 per year or less, you are qualified to use the IRS short forms -- 1040-EZ or 1040A. The short forms are the easiest way to file your taxes, so it's probably worthwhile.
Tsunami and Other Charitable Donations Congress passed legislation saying charitable contributions made for tsunami relief before the end of January 2005 can be used as 2004 deductions. And it can be helpful to also include non-cash charitable items. So if, for example, you baked pies for the church social, you can deduct the cost of the ingredients.
Common Errors The most common tax return mistake is miscalculating earned income credits, which apply to people in lower-income brackets who have dependents. It's also wise to double-check Social Security numbers, and make sure to sign your tax form. If you did not sign, then technically you did not file.
Gas Mileage Deductions The cost of gasoline has gone up, and so have mileage deductions for business or charitable use of your personal car. How much you claim depends on how you use the car. For medical, charitable or moving mileage deductions, it's 14 cents per mile. For business use, it's 37 ½ cents per mile. Next year the business deduction will climb all the way to 40 cents.
Nondeductible Items Many things that are thought to be deductible actually are not, including burial and funeral expenses, license fees for things like wedding or driver's licenses, home repairs, insurance and losses from the sale of personal property. Other nondeductible items include personal living and family expenses, campaign and lobbying expenses, and fines or penalties like parking tickets.
IRA Contributions If you haven't yet made your 2004 IRA contribution, there is still time. You have until April 15, 2005, to make last year's contribution. You can contribute a maximum of $3,000, and if you're over 50 you can throw in an extra $500.
Tax Breaks for Education There are a number of tax breaks for both students and educators. Teachers who have out of pocket expenses can deduct up to $250 of qualified expenses. For students, the maximum deduction for tuition and fees has been raised to $4,000 this year.
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