Friday, November 21, 2008

Perez's Tax Basics


As anyone who reads my blog knows, I am a huge fan of William Perez, writer for About.com. His blog gives you a simple and easy view of tax basics and always keeps you updated on current tax changes.


In reading some of his blog articles, I came across some of the best links to searches for taxpayers who need a better understanding of how the federal taxing system works in regard to preparing your Form 1040 each year.


Understanding how the tax system works is the first key to lowering your taxes. Take a minute to look through this list, I truly believe that there will be a topic that will catch your eye and ultimately will give you some insight into helping you reduce your liability for the coming tax season.


Filing Status

Choosing the right filing status impacts your tax rates, standard deduction, and various limits on tax deductions. Choosing the best filing status can go a long way to making sure you are paying the right amount of tax.



Dependents

Who can you claim as a dependent on your tax return? The answer may surprise you. Congress changed the law regarding dependents in 2005, causing confusion for taxpayers and professionals alike. Being able to claim a dependent will help lower your taxes by increasing your personal exemptions and qualifying you for various child-related tax credits.



Investing and Taxes

Taxpayers who invest in stocks, bonds, mutual funds, or real estate can benefit from the lower tax rate on long-term gains. Homeowners in particular can exclude up to half a million dollars in profits when they sell their primary residence. By shifting investment income to long-term gain, you can lower your taxes significantly.



Popular Tax Breaks

Some of life's bigger expenses can help lower your taxes. Here's a list of common expenses can will help qualify you for a deduction or tax credit.

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