Tax Help - There's More To Alimony Than You Think

Alimony is deductible by the payer and reportable as income to the recipient. But it can also provide more deductions for the payer.

For instance, under the terms of a divorce, a taxpayer is required to make the payments on his former spouse’s car, health insurance premiums, and the mortgage and property taxes on their jointly owned home. The former spouse resides in the home. Do you think any of these payments qualify as deductible alimony payments?

Most definitely, yes. The payments he makes for the care and the health insurance premiums qualify as deductible alimony, even if they are paid directly to the bank and the insurance company.

One-half of the interest on the mortgage payments he makes for the joinly owned home qualifies as alimony; the other half is deductible on his Schedule A.

None of the real estate taxes he pays is deductible as alimony; however the entire amount is deductible on his Schedule A.

Additional reading material:

Frequently Asked Questions - Alimony

Tax Topic - Topic 452 Alimony Paid

Tax Topic - Topic 406 Alimony Received

Tax Help - Accelerating Your Deductions

Accelerating deductions is another way to maximize your tax benefit.

Itemizing Deductions

Higher standard deductions — $5,350 for Single and Married Filing Separately, $7,850 for Head of Household, and $10,800 for Married Filing Jointly and Qualifying Widow(er) statuses — mean that fewer taxpayers benefit from itemizing deductions. (The standard deductions are even higher for taxpayers age 65 and older and those who are legally blind.) Itemizing generally pays off only if your qualifying expenses total more than the standard deduction for your filing status.


Bunching

When deciding whether or not to itemize deductions, your year-end strategy should focus on bunching, the practice of timing expenses to produce "lean" and "fat" years. In 1 year, you would try to amass as many deductible expenses as possible. For example, you can time your fourth-quarter state estimated tax payment and certain medical procedures to ensure the expenses are paid when they will result in the greatest tax benefit. The goal is to surpass the standard deduction amount and claim a larger deduction.

In alternating years, you skimp on deductible expenses to hold them below the standard deduction amount because you get credit for the full standard deduction regardless of how much you actually spend. In the "lean" years, year-end plans stress pushing as many deductible expenses as possible into the following "fat" year when they'll have some value.


Accelerating Deductions

Accelerating deductions is 1 method of trimming taxable income — and your tax bill — for the current year. Some examples:

You can make your last state estimated tax payment in December rather than the following January.

If your current-year medical expenses are close to or exceed 7.5% of your adjusted gross income (AGI), but are usually below the 7.5% threshold, try to schedule next year's expenses for this year. For example, purchase glasses and prescription drugs or schedule a physical in December.

If you're allowed to pay your real estate tax in 2 installments — for example, December and June — consider paying the full year's tax in December.

Note: Some of the expenses you can normally deduct (for example, taxes and expenses subject to the 2% of AGI floor) are not deductible if you're subject to the alternative minimum tax. Accelerating those expenses may not result in tax savings.

Tax Help - Take Advantage of Job Search Expense Deductions

With the unemployment rising on a daily basis, here is another deduction that you should consider....................

Job search expenses can be deducted as miscellaneous itemized deductions if you look for a job in the same field at the same level as the one you left. The expenses are deductible — even if you don't get the job.

You can claim job-seeking expenses as long as the amount of all miscellaneous itemized deductions is more than 2% of your adjusted gross income (AGI). Job seeking deductions are also subject to the overall limitation on itemized deductions based on income threshold amounts. To figure your deduction, subtract 2% of your AGI from the total amount of these expenses.

Allowable Deductions

You may be eligible for the following deductions while you're searching for a job.

1. Employment agency fees: If in a later year your new employer repays your agency fees, you must include the amount in your income up to the amount of the deduction you claimed earlier. If your employer pays fees directly to the agency, you don't have to include them in your income.
2. Resume preparation: typing and printing, postage, long-distance charges, advertising, and photographs required for your resume.
3. Travel: airfare, mileage (some automobile expenses have been approved), lodging and meals (based on either actual expenses or standard federal per diem rates).
4. Legal fees protecting employment status.

Qualifications

To qualify for a deduction, your job search must be for a job in your current, or most recent, trade or business and should be at a similar level of responsibility with duties similar to those of your most recent job.

• If you haven't held a job in that trade or business for an extended length of time, your job search will be considered for a new trade or business, and your deductions may not be allowed.
  
• If you held a college internship or valid job while in college and your search is for a job in the same trade or business, you will be able to take the job search deductions.
• If you're just out of school and had no paying jobs while in school that were related to your trade or business, your deductions won't be allowed.
  

To learn more about job-hunting deductions, contact a tax professional.

Tax Help - Accelerated Deductions

Itemizing Deductions

Higher standard deductions — $5,350 for Single and Married Filing Separately, $7,850 for Head of Household, and $10,800 for Married Filing Jointly and Qualifying Widow(er) statuses — mean that fewer taxpayers benefit from itemizing deductions. (The standard deductions are even higher for taxpayers age 65 and older and those who are legally blind.) Itemizing generally pays off only if your qualifying expenses total more than the standard deduction for your filing status.

Bunching

When deciding whether or not to itemize deductions, your year-end strategy should focus on bunching, the practice of timing expenses to produce "lean" and "fat" years. In 1 year, you would try to amass as many deductible expenses as possible.

For example, you can time your fourth-quarter state estimated tax payment and certain medical procedures to ensure the expenses are paid when they will result in the greatest tax benefit. The goal is to surpass the standard deduction amount and claim a larger deduction.

In alternating years, you skimp on deductible expenses to hold them below the standard deduction amount because you get credit for the full standard deduction regardless of how much you actually spend. In the "lean" years, year-end plans stress pushing as many deductible expenses as possible into the following "fat" year when they'll have some value.

Accelerating Deductions

Accelerating deductions is 1 method of trimming taxable income — and your tax bill — for the current year. Some examples:

• You can make your last state estimated tax payment in December rather than the following January.
• If your current-year medical expenses are close to or exceed 7.5% of your adjusted gross income (AGI), but are usually below the 7.5% threshold, try to schedule next year's expenses for this year. For example, purchase glasses and prescription drugs or schedule a physical in December.
• If you're allowed to pay your real estate tax in 2 installments — for example, December and June — consider paying the full year's tax in December.

Note: Some of the expenses you can normally deduct (for example, taxes and expenses subject to the 2% of AGI floor) are not deductible if you're subject to the alternative minimum tax. Accelerating those expenses may not result in tax savings.

S. Raines, Sr. Financial Advisor/Tax Preparer

Charitable Contributions

Keep in mind you can deduct your charitable contributions only if you itemize deductions. Plus, not every non-profit organization is a tax-qualified charitable organization. Be sure to ask the organization whether your contribution is tax-deductible, or check with the IRS.

If you do itemize and give to a qualified charity, you can deduct cash donations and donations of property, but you can't deduct the value of donated time and services.

If you contribute to a charity and receive something in return, such as dinner, then your deduction is the amount you paid or the value of the property you donated minus the value of the goods or services received. But if you don't have to reduce your deduction if you get a small item or other benefit of token value and the charity determines that the value or benefit received is not substantial and that you can deduct the entire amount you paid.

Money Contributions. Money contributions include amounts you donate to a charity in the form of cash, check, credit card or payroll deduction.

New: You must have a receipt from the charity or a bank record for all charitable cash donations to claim a deduction on your tax return.

Out-of-pocket and car expenses you incur while donating your services are also in this category. For example, if you're a graphic designer who spent time on the church newsletter, you can't deduct your professional hourly fee. But you can deduct 14 cents per mile for the use of your car for charitable purposes. Or you can deduct your actual expenses, such as gasoline. If you donate any supplies or food during your volunteer work, you can deduct the cost of them as well.

Item Donations. When you donate property, you generally can deduct the fair market value of the property. But you must reduce the value of the donated property (including a vehicle) by the amount of income that would be ordinary income or short-term capital gain if you sold the property. Capital gain property is the term used to describe donated property the sale of which would result in long-term capital gain if sold.

You can deduct the purchase price of new items, but the deduction amount for used goods, such as clothing, household goods, furniture or other non-cash items is based on the item's fair market value. When figuring the fair market value of used goods, check prices in stores that sell used goods, such as thrift stores. You can't claim a deduction for household items, such as furniture or clothing, unless the items are in good condition or better.

If you donate noncash items with a total value of more than $500, you must file Form 8283 with your return. You may need a qualified appraisal if you donate an item or a group of items with a value of more than $5,000.

If you donate a car, boat or plane with a claimed value of more than $500 to a charity, you can deduct the smaller of the fair market value of the vehicle or the gross proceeds of sale received by the charity from the sale of the item. However, you can generally deduct its fair market value if the organization:
makes significant use of the vehicle.
materially improves the vehicle.
transfers the vehicle to a needy individual whose receipt of the vehicle is directly related to the charitable purpose of the organization.

The charity will provide you with a copy of Form 1098-C, that shows information relating to your donation of the vehicle. You must attach a copy of Form 1098-C to your return.

Donations of Time and Services. You can't deduct the value of your time or services spent on charitable work, but you can deduct your out-of-pocket costs as explained under "Cash Donations" above.

Limits on the Deduction. The deduction for charitable contributions generally is limited to 50% of your adjusted gross income (AGI). The deduction for appreciated property is limited to 30% of your AGI if you choose to deduct the fair market value of the property or 50% if you choose to deduct the basis of the property. The 30% limit also applies to donations of property to certain organizations, such as veterans' organizations, fraternal societies, nonprofit cemeteries, and certain private nonoperating foundations, and to donations of property for the use of an organization. A 20% limit applies to gifts of capital gain property to or for the use of an organization subject to the 30% limit. Contributions in excess of the limit can be carried forward for up to 5 years. Applying the limits properly can be complicated. See IRS Publication 526 for more information.

S. Raines, Sr. Financial Advisor/Tax Preparer

Job Deductions

The following are some job related deductions that you need to consider for filing your tax return.

• Common employment deductions include your computer, mobile phone, work uniforms, union dues and professional or trade association dues.
• Although the cost of driving to and from work isn't deductible, travel to secondary or temporary job locations could be.
• The expenses of using an area of your home for business may be deductible if the area is used exclusively and regularly for work and the use is for your employer's convenience.

If your employer doesn't reimburse you for ordinary and necessary expenses you pay, you may be able to deduct the cost as a miscellaneous itemized deduction subject to the 2% adjusted gross income floor. You can't deduct the cost of any item for which you would have been reimbursed if you'd asked for the reimbursement.

Which deductions qualify and why?

If you do end up paying out-of-pocket for job-related expenses, you may be able to deduct them on your return. In general, deductible expenses must be ordinary and necessary. An expense is ordinary if it is common and accepted in your trade, business or profession. An expense is necessary if it is appropriate and helpful to your business. An expense does not have to be required to be considered necessary.

Deductible expenses include the following:

• bonding
• physical examinations
• office supplies not provided by your employer
• professional or trade association dues
• research, lecture and writing expenses
• safety clothes and equipment
• union dues
• personal tools and equipment
• travel, meal and entertainment expenses (see Publication 463)
• computers and mobile phones (see Publication 946)

You must report these and other unreimbursed business expenses on line 20, Schedule A or on Form 2106.

Business Travel

The expense of your daily commute to work isn't deductible. However, if you find that you must travel to secondary or temporary locations — even within your metropolitan area — as part of your job and your employer does not reimburse you for that travel, those expenses may be deductible. Also, travel to and from a second job may be deductible.

Unreimbursed expenses for business travel outside of your metropolitan area may also be deductible. And you generally can deduct 50% of the cost of qualifying meals and entertainment expenses. You must complete Form 2106 to claim these deductions.

Home Office

If you use a portion of your home regularly and exclusively for business, you may be able to deduct expenses for that portion of the home, including interest, taxes, rent, insurance and utilities. You can deduct business expenses for the use of your home only if the use is for your employer's convenience. Special rules apply if your employer pays you rent for the portion of the home you use for business.

Tax Debt Help - Deductions & Credits

The goal of every taxpayer whether small business or corporations is to lower your tax liability. In a word, “deductions lower your taxable income, and credits lower your taxes”. Below is a list of links that will provide you with a brief description of those deductions and credits and ultimately…..”lower your tax liability”.

Tax Deduction for Charity Donations

Home Mortgage Interest Tax DeductionEnergy Tax CreditsOther Tax Credits - Form 1040

Adoption Tax Credit: How to Claim the Adoption Credit Child Tax Credit: How to Claim the Child Tax Credit on Form 1040

Retirement Savings Contribution Credit

Education Credits - Hope and Lifetime Learning Tax Credits

Credit for the Elderly or Disabled - Form 1040 Line 48 Child Care Tax Credit & Dependent Care Expenses - Form 1040 Line 48

Adjustments to Income - Preparing Your 1040 Step 5

Adoption Credit - Form 1040 Line 52

Alimony Paid Tax Deduction Casualty & Theft Losses

Child Care Tax Credit & Dependent Care Expenses - Form 1040 Line 47

Child Tax Credit - Form 1040 Line 51

Classroom Expenses Deduction Credit for the Elderly or Disabled - Form 1040 Line 48

Domestic Production Activities Deduction - Section 199

Early Withdrawal Penalty Deduction

Earned Income Credit: Qualfying for the Earned Income Tax Credit Education Credits, Hope Credit, Lifetime Learning Credit, Form 1040 Line 49

Educator Expenses: Claiming a Tax Deduction for Educator Expenses

Foreign Tax Credit - Form 1040 Line 46

Qualified Performing Artists (QPA) Deduction Moving Expenses

Self-Employment Tax Deduction

Self-Employment Health Insurance Deduction

SEP-IRA Deduction Early Withdrawal Penalty Deduction Alimony Paid Deduction

Health Savings Account Deduction

Health Savings Account Deduction: Tax Deduction for Health Savings Accounts How To Pay Zero Taxes 2005 (Book Review)

Hybrid Car Tax Credit – Essential Information about the Alternative Motor Vehicle Credit

Hybrid Car Tax Deduction - Clean Burning Fuel Deduction

IRA Deduction (Traditional Individual Retirement Account) Itemized Deductions

Job Search Tax Deduction Tips

Limitations on Itemized Deductions

Moving Expenses Tax Deduction Other Tax Credits - Form 1040 Line 53
Personal Exemptions

Qualified Performing Artists Expenses

Retirement Savings Credit, Form 1040 Line 50 & Form 8880

Self Employment Tax Deduction Self-Employment Health Insurance Deduction

SEP, SIMPLE, Retirement Plan Deduction

Standard Deduction

Student Loan Interest Deduction Student Loan Interest Tax Deduction

Tax Credits

Traditional IRA Tax Deduction - Individual Retirement Account Deduction

Tuition and Fees Deduction for College Expenses

Tuition and Fees Tax Deduction

S. Raines, Sr. Financial Advisor/Tax Preparer

Your Taxes A-Z

Doing your taxes is not as easy as ABC, but these alphabetical tips could make the process less difficult and save you some money, too. Here's the start of some A-to-Z tax opportunities to take or pitfalls to avoid. A. Above-the-line deduction N. Nontaxable income B. Basis O. Offer in compromise C. Casualty loss P. Payroll taxes D. Dividends Q. Qualifying widow or widower E. Enrolled agent R. Rollover F. Filing status S. Standard deduction G. Gains T. Temple H. Hobby U. Unearned income I. IRA V. Voluntary compliance J. Jacuzzi W. "W" K. Kiddie tax X. Xerox copies L. Las Vegas winnings Y. Youngsters M. Mortgage interest Z. Zilch

As a subscriber to Kay Bell’s blog site, “Don’t Mess With Taxes”, I have found this list of A-Z tax terminology that is absolutely great and wanted to share it with everyone. You go Kay……………..

Above-the-line deduction -- This special group of deductions is a great time and money saver for many taxpayers. Not only do you get to deduct things such as alimony paid, some college costs and some financial account penalties you paid, you don't have to mess with Schedule A and itemizing to claim them. Technically, they are adjustments to your income. They help reduce your total earnings to the amount upon which you ultimately figure your tax bill -- your adjusted gross income. The lower your AGI, the less tax you should owe. And the name? These dozen or so deductions are at the bottom of Page 1 of the long Form 1040, just above that page's last line, so they are literally "above the line."B

Basis -- Before something can be taxed, you (and the Internal Revenue Service) must know its basis, or what it's worth. Basis, which also is sometimes referred to as "cost basis," comes into tax play when you sell an asset and you must determine if you owe any taxes on it. You get to adjust the asset's basis, taking into account, for example, improvements and depreciation in the case of real property or transaction fees and previously paid taxes in the case of stocks or mutual funds. Figuring your correct basis is critical. Mess it up and you'll come up with a basis that's too low, and that means a bigger tax bill than necessary. C

Casualty loss -- No one ever wants to suffer damage to their property. When it does happen, you might be able to at least get a bit of tax help from Uncle Sam. It doesn't matter whether your loss is caused by a natural disaster, such as a hurricane, earthquake or flood, or at the hands of a thief or vandal. They all count as casualty losses as long as they're sudden, unexpected or unusual. By itemizing your taxes, you might be able to write off a portion of your damage amount on your taxes.

Doing your taxes is not as easy as ABC, but these alphabetical tips could make the process less difficult and save you some money, too. Check out these D, E and F tax opportunities to take or pitfalls to avoid.

Dividends -- These investment earnings are a great way to save for retirement or come up with a little extra spending money. The bad news: Dividends are taxable income. The good news: Thanks to a legislative change a few years ago, they are now taxed at a lower rate. In cases where the dividend payments meet IRS guidelines, they are taxed at 15 percent (or possibly just 5 percent for some lower-income investors) instead of your ordinary tax rate, which could be as high as 35 percent. When you get your account's year-end tax statement, it will tell you whether any dividends qualify for the lower 15 percent rate.

Enrolled agent -- If this is the year you decide to hand your taxes over to a professional preparer, one of your choices is an enrolled agent. This type of tax pro has a long history; the first enrolled agents started helping taxpayers claim legitimate losses they suffered in the Civil War. Today, they also can help you file your routine return and, more importantly, are officially authorized "agents" who can appear in your place to resolve a dispute with the IRS. Some other tax professionals can accompany you to IRS meetings to counsel you and help explain your tax issues, but EAs can go to these sessions in your place.

Filing status -- Picking the proper filing status could make the difference between owing the IRS or getting a nice tax refund. When you fill out your return, you must choose from one of five filing status options: single, married filing jointly, married filing separately, head of household or qualifying widow or widower. Each one helps determine your standard deduction amount, as well as what additional tax deductions or credits you might be able to claim. Some filers might find they meet the requirements for more than one filing status. In that case, look over exactly what each offers and make sure you pick the one that gives you the best, least-costly, tax return.

Doing your taxes is not as easy as ABC, but these alphabetical tips could make the process less difficult and save you some money, too. Check out these G, H and I tax opportunities to take or pitfalls to avoid.

Gains -- When you sell an asset and make money on it (after first determining your correct basis that we talked about earlier), you have a gain to report to the IRS. This profit is generally referred to as a capital gain. But just how much in taxes you owe depends on the type of capital gain you recognize, either long term or short term. And the tax laws reward sellers who hold onto their property for a longer period of time. When you sell an asset you owned for more than a year, even just a year and a day is fine, any profit on its sale is a long-term capital gain and is taxed at a more favorable rate: 15 percent for most taxpayers. By contrast, gain on assets you own for a year or less before selling will be taxed at ordinary tax rates, which could go as high as 35 percent. So if you have a choice on when to sell an asset, your patience could pay off at tax time.

Hobby -- You really enjoy taking photographs and are good enough that you've socked away some extra spending money by accepting a small fee for snapping shots at your neighbor's family reunion or a co-worker's wedding. But beware, that money is taxable income -- unless you can find a way to whittle down your net take. One way to do this is turn your hobby into a job. When you make your hobby into a legitimate income-producing effort, tax breaks follow.

IRA -- Most of us have some form of this popular type of retirement savings plan. You can open a traditional individual retirement account, favored by some people because they then can deduct their contributions from their taxes. They will, however, have to pay taxes on the IRA money when they take it out at retirement. Other savers opt for a Roth IRA. You can't deduct contributions to a Roth account, but when you make qualified withdrawals from your account, the money won't be taxed. Each type of account has eligibility requirements, primarily based on income and age. With most IRAs, you have until April 15 (or the next business day if the 15th falls on a weekend or holiday) to pick an account and put your money in it so that it counts toward last year's taxes.

Doing your taxes is not as easy as ABC, but these alphabetical tips could make the process less difficult and save you some money, too. Check out these J, K and L tax opportunities to take or pitfalls to avoid.

Jacuzzi -- Are you still working with a physical therapist to recover from that compound fracture you suffered on the slopes of Aspen? Did your orthopedic surgeon prescribe a whirlpool bath to help that process along? Then you might be able to write off the cost of your new Jacuzzi. Taking all the medical deductions you are entitled to is important since you must come up with an amount that's more than 7.5 percent of your adjusted gross income before the expenses are of any tax use.

Kiddie tax -- This tax is officially known as the "Tax for Children Under Age 18 Who Have Investment Income of More Than $1,700." It's no wonder, then, that it's usually referred to as the "kiddie tax." This provision was created to keep parents from sheltering large amounts of income by putting financial accounts in the names, and lower tax brackets, of their kids. This used to be a relatively easy tax-saving technique, but in 2006 the law was changed. Now when investment accounts are held by someone younger than 18 and the earnings exceed the annual limit, adjusted each year for inflation, the young account owner must pay taxes at his or her parents' higher tax rate. This is usually is taken care of by the parents adding the child's income to the adult filing, which could produce other problems by pushing up the parental income level. In some instances, an investment plan for your children still might be good idea. Just make sure you understand all the tax implications of your youngster's assets.

Las Vegas winnings -- When you can no longer fight off the lure of Sin City's casinos, just remember that the IRS will share in any of your good gambling luck. Gambling winnings, as well as the value of any prizes you win, are taxable. If your jackpot is big enough, the casino or horse track or lottery agent will take the taxes out first. You'll also get an official tax statement; so will Uncle Sam, so don't try to pretend at tax time that you didn't pocket the winnings. Of course, there's no way for the IRS to track all off-the-book wagers, such as the friendly office pool. Still, you're supposed to report, and pay taxes on, all gambling winnings regardless of the source. (And knows you will faithfully comply.) The one bit of good news here is that you can subtract your losing bets from your windfall to lessen the tax bite just a bit.

Mortgage interest -- This is probably the most well-known tax break: You can deduct the interest you pay on your home's mortgage. Interest on a second mortgage or home equity loan or line of credit is generally deductible, too. The interest deduction is just one of many tax advantages afforded homeowners, and it is taken into consideration every day by prospective buyers trying to figure just how much house they can afford. Owning a house is not the only way to cut your taxes. Most homeowners also get a break when they sell their primary residence; up to $250,000 in profit (double that for married couples who file jointly) is exempt from taxation.

Nontaxable income -- When you slog through your taxes, it sure seems like the IRS is taking a bite of every last penny you have. That's not quite true. While the federal government does collect a lot from most of us, there actually is income that isn't taxed. Senior citizens relying solely on Social Security income, for example, don't have to pay on those benefits. Of course, if they're supplementing it with other income, a portion of Social Security might be taxable. Other money that's not federally taxed includes child support, gifts, bequests and inheritances, most life insurance proceeds, workers' compensation payments, insurance and other reimbursements for casualty losses and certain Roth IRA distributions.

Offer in compromise -- Most of us, however, find that the bulk of our income is taxable; sometimes, way too taxable. And occasionally, we find that we can't handle the tax bill we face on April 15. If you find yourself in this position, don't panic. You do have payment options, including an offer in compromise. This is a lump sum tax payment that you offer to pay; it's less than the total amount of tax you owe, but in some cases the IRS will accept your offer in order to get some money from you sooner rather than more after years of costly collection efforts. The key here is to make a reasonable offer. There is a process the agency follows, and despite what those late-night cable TV commercials say, you can't walk away from thousands in tax debt for mere pennies.

Payroll taxes -- When you collect the bulk of your income via a regular check from your employer, payroll taxes are collected before you ever get your money. These amounts, subtracted from your earnings via withholding, include federal and state income taxes, as well as payments to the Social Security and Medicare systems. Your employer is required by law to collect payroll taxes and send the money to the federal government where it's held in the appropriate accounts in your name. You get the details each year on your W-2 statement. But you also have a responsibility to ensure that the correct amount is withheld from your checks. Too much withholding means Uncle Sam gets free use of your money all year; too little, and you'll owe at filing time. So check your withholding amount and adjust it if necessary.

Qualifying widow or widower -- When you lose a spouse, taxes are not going to be among the first things that you worry about. However, there is a special filing status for widows or widowers who meet certain IRS guidelines, and it could help make the first couple of tax returns after your loss less costly. Tax law allows you to file a joint return for the tax year in which your spouse passed away. Then, for two years following the year that your spouse died, you might be eligible to file as a qualifying widow or widower if you are supporting a dependent child. If you meet the requirements to use this filing status, you'll be able to use the same tax considerations given married joint filers, such as the largest possible standard deduction amount.

Rollover -- When you leave your job, in addition to packing up your desk, you'll probably want to take your company retirement savings account along with you, too. But be careful how you take possession of the account, or it could cost you. Although legally you can have your company give you the account in a lump sum, you must deposit the full amount into another qualified retirement account within 60 days or pay taxes on it. The easiest move, both from tax and administrative standpoints, is to directly roll over your company 401(k) into another qualified retirement plan. That way, you won't lose any of the money's tax-deferred earning power, you won't owe the IRS anything and, most importantly, you won't be tempted to spend your nest egg on something you don't really need.

Standard deduction -- Most people choose to claim the standard deduction amount when they file their taxes. It's easy; the amount is right on your return near the line where it should be entered and there are no receipts to keep track of or threshold amounts to meet as is the case when you itemize your deductions. But don't automatically take the easy, standard deduction route. Compare your standard versus itemized deduction amounts and take the one that's larger. It will get you a smaller tax bill or a bigger refund.

Temple -- If you gave to your temple, synagogue, church, mosque or other house of worship, it could help cut your tax bill. Religious organizations are generally classified as IRS-approved groups, meaning your donations to them are deductible as charitable contributions, as long as you choose to itemize rather than take the just-examined standard deduction. And don't shortchange yourself when totaling your generosity. Remember to tally up the value of any goods you donated last year. Just make sure the items met the new tax rules requiring that they be in good or better condition or you could lose the deduction.

Unearned income -- You've decided to venture into the investing world, putting your hard-earned salary to work producing more cash. But the added money you make from savings accounts, stocks and bonds, certificates of deposit or mutual funds have tax implications. As your nest egg grows, so do your taxes. The IRS calls these investment earnings unearned income and, in most cases, it is taxable. You might, however, get a bit of a break. Some earnings are taxed at a lower rate, typically 15 percent, than applied to your ordinary earned income (wages, tips, salaries, etc.), which could be taxed at a level as high as 35 percent. Just what type of unearned income you collect and where to report it will be detailed in the various 1099 forms you should get each January or early February. And while you'll probably have to fill out a few more tax forms and run additional computations, it should pay off in a smaller tax bite into your unearned income.

Voluntary compliance -- Since you're visiting to get information on how to file and reduce your tax bill, it's a pretty good bet that you're committed to this basic tenet of the U.S. tax system. Basically, this is the philosophy upon which our tax system is based: that U.S. taxpayers voluntarily comply with the tax laws and report their income and other tax items honestly. Of course, if you try to shirk this duty, the IRS will try to "encourage" you to file, usually by sending you a notice alerting you to a mistake on your return or a balance you owe. If you choose to ignore IRS nudging, you'll get slapped with penalties and interest charges, or worse, for unfiled forms or unpaid taxes.

"W" -- This, of course, is the nickname for President George W. Bush, who has made revamping the U.S. tax code a key goal of his administration. During his tenure, W and Congress have tweaked existing laws: lowering tax rates, increasing some credits, easing the marriage penalty, lessening the tax bite on some investments and even reinstating the sales tax deduction, a welcome break for residents of states with no income taxes to write off. But the major changes the president sought will take a little longer to make, especially in light of the midterm election and subsequent Democratic takeover of Capitol Hill. And while the Presidential Advisory Panel on Federal Tax Reform presented recommendations in November 2005 on ways to restructure the tax code, the panel's more controversial changes -- such as eliminating the deductions for mortgage interest and property taxes -- have met with political and public resistance.

Xerox copies -- Did you make hundreds of Xerox copies of your resume as you searched for a new job? Uncle Sam might be able to help you defray that copying cost. In order to claim any job-hunting expenses, you must look for a position within your current field. You can't ask the IRS to help you go from software programmer to songwriter, although a good deal of creativity is required for both. Your career change costs also will have to be pretty substantial; they are included as part of miscellaneous deductions, meaning all these expenses must total more than 2 percent of your adjusted gross income before you can claim them. To help you reach that threshold, you also can count employment agency fees, want-ad placement costs and even out-of-town job-hunting trips. Just be sure to save your receipts.

Youngsters -- Children can add a lot to your life, and at tax time you can actually put a dollar sign on your youngsters' value. There are many tax joys of parenthood, from the child tax credit to write-offs for some care costs to help paying for school, from kindergarten through college. Plus, every son or daughter is an added exemption on your tax return. But if you have a really large family, you might end up owing the alternative minimum tax. This parallel tax system was created to make sure wealthy taxpayers paid their fair share. Now, however, since the AMT does not take inflation into account, it is snaring more middle-income taxpayers, some of them because they legitimately claim a large number of personal deductions for children.

And finally, we have reached the end of our tax alphabet with:

Zilch -- If you didn't take all the legitimate tax breaks that you're eligible for, this could be the amount you have left after paying your taxes. But here's hoping that these alphabetical tips mean that zilch is the amount that the IRS will get from you this tax-filing season.

S. Raines, Sr. Financial Advisor/Tax Preparer