Personal Tax Preparation &
Income Tax Planning Tips from
Brookwood Tax Service -- Summer, 2005 Archive Articles
(NOTE: The tax
information in the following articles was current as of the date on the
page. Tax law may have changed since these articles were posted.)
How To Prove a Deduction Without a
Tax Tips on Coping with the New "Check 21" Law
Banks are now permitted to convert the data on a
check into an electronic record and then destroy the check. What do
you do to prove a tax deduction without a cancelled check?
Rules for Deducting Noncash Donations to
Your Deduction May be Limited by New IRS
Taxpayers who donate automobiles to charity in
2005 or later must comply with new rules that may limit the tax deduction
they can claim.
Did You Owe the IRS or Get a Big Refund for
Tax Tip - Adjust Your Withholding to Solve
If you received a large refund, you effectively
made the government an interest-free loan for the year. If you owed
additional tax with your return, you can make changes to come out closer
to even. The solution lies with Form W-4.
Tax Tip On Claiming
the New Sales Tax Deduction
This Option Can Save Additional Federal Tax
The new federal deduction for payment of state
sales tax is a slam-dunk for taxpayers in states which do not have state
income taxes. But the deduction can be a money-saving option on
occasion for taxpayers in other states as well.
Traditional IRA to a Roth
Tax Tip on Saving Future Taxes
Converting a traditional IRA to a Roth requires
paying current-year income tax on the amount of the conversion.
However, the option may well save thousands of future tax dollars on
distributions taken over the life of the account holder and his/her
Minimum Tax Trap
Tax Tips on Avoiding the Trap or Minimizing the Bite
Millions of taxpayers are now being snared by the Alternative
Minimum Tax (AMT) each year, and the numbers are expected to soar in the
future. You should be alert for financial situations that can
increase your risk of falling under the AMT, and be prepared to take
actions that can reduce the AMT's bite if you will be subject to the tax.
Helping Out a Friend or Relative Cover
The IRS Won't Necessarily Allow You a Deduction
Payment of an expense for a relative or friend will not, in most cases,
result in a tax deduction on your return. In many cases, a better
option is to make a cash gift to the other person, who then may be able to
take the deduction on her/her return.
New Car Rebates
IRS Says They Are NOT Taxable
The IRS has written firm guidance that rebates on
new car purchases are not taxable income to the buyers.
Tax Tip for Health Savings Accounts
Claim an Up-Front Deduction for HSA Contributions
You can claim a deduction for a contribution to a Health Savings
Account (HSA). Plus, funds can be withdrawn tax-free to pay eligible
Tax Benefits for Members of the Military
The IRS advises that military enlistees and reservists called to active
duty who have outstanding tax balances due may be able to defer payment
until the completion of their active duty. The Military Family Tax Relief Act of 2003 has various
other benefits related
to military service. Several earlier tax law provisions gave breaks to
those serving in combat areas.
Information for Members of the U.S. Armed Forces has links to these
details and more.