Identifying Above The Line Tax Reductions for your return in 2010
Written by Editor on March 8th, 2010
When it comes to federal business taxes, your goal should be to pay just what is owed, nothing more. Since your tax liability is calculated by your net income, the surest way to reduce the taxes you pay is to reduce your income. Of course, you need to do this without technically reducing your income. You can do this by taking legal above-the-line tax deductions.
Above-the-line-tax deductions are more like tax breaks that are adjustments to your income. They’re identified as above-the-line because they are reduced on the first page of the tax return just above the bottom line. These deductions reduce your adjustable gross income and in the end reduce your tax liability.
The following are a few above-the-line tax deductions that are discussed in our Domain Tax Guide which you should consider if you are eligible.
• Moving expenses, if you relocated for employment purposes.
• Self-employment. Half the total of taxes that are paid to Social Security and Medicare.
• Self-employed retirement plans.
• Self-employed health insurance. The total amount you pay in health insurance fees not only for yourself, but for your spouse and dependents as well. Even contributions towards long-term care policies are included.
• Penalties paid for early withdrawal of savings. The account manager of such an account should send you a 1099-INT or 1099-OID form including the early withdrawal penalty.
• Alimony payments. If you are divorced and paying alimony, you can deduct these payments from your income. You must provide your ex-spouse’s social security number; or the deduction might be disallowed.
• IRA deductions for amounts contributed to traditional IRAs for individuals who are self-employed.
• Student loan interest. Up to $2,500 in student loan interest paid can be deducted for single filers making $65,000 or less or joint filers making $135,000 or less.
• Jury duty pay if it was turned over to your employer.
Individuals can get most of these above-the-line tax deductions by utilizing the long form, 1040. If you would rather use the short from, 1040A, you may still take some of these deductions. Early account withdrawal penalties, IRA contributions, student loan interest and jury pay are the above-the-line-tax deductions that are allowed on the 1040A tax return. Consult with your personal tax consultant for more details or check out this Domain Tax Guide Review.
Related posts:
- Mortgage Interest Tax Deduction Calculator for 2009, 2010 If you decide to itemize your tax return then you...
- Amended Federal Tax Return for 2009, 2010 If you need to make a change or an adjustment...
- Income Tax Return Clarification What are income tax returns? Each spring is income tax...
- Why Would You Get A Home Equity Line Of Credit? Once we got wind of a Home Equity Line of...
- Earned Income Tax Credit Calculator 2009, 2010 The Earned Income Credit is a credit that many low...
Related posts brought to you by Yet Another Related Posts Plugin.
O comments at "Identifying Above The Line Tax Reductions for your return in 2010"
Comment Now!