Today’s savvy homeowners often opt for remodeling projects to improve the enjoyment and usability of their living spaces. As household budgets tighten, consumers are cutting back on going out in favor of entertaining at home. And that means renovations like kitchen and bath makeovers or finishing basements to add living space are priorities on many “to do” lists. From enjoying more home-cooked meals to movie nights and “staycations,” the family room may be the most popular hangout this year.

When it comes to remodeling, the desire to add more natural light and cutting the time and cost of maintaining a home remain high priorities. Although some consumers have less “green” to spend today, green remodeling is growing in popularity and is less taxing thanks to a growing number of environmentally-friendly options.

Just in time for home improvement projects, the American Recovery and Reinvestment Act includes qualifying tax credits for energy-saving home improvements like high-efficiency windows and doors, heating and cooling systems, water heaters and insulation.

Under the economic stimulus plan, American homeowners can claim a tax credit up to 30 percent of the cost of qualifying energy-efficient replacement windows and doors, not exceeding $1,500 for units installed in 2009 or 2010.

So where do you start? Pella Designer Series windows and patio doors which feature triple-pane glass are rated No. 1 for energy efficiency among top national brands. New, energy-efficient ENERGY STAR-qualified windows like wood or vinyl options from Pella keep your home cooler in the summer and warmer in the winter to help cut utility costs while adding style and comfort.

Now’s the time to tackle a home improvement project to add to the enjoyment of your home. Window replacement helps save energy and creates a better view of your world. Visit your local Pella Window & Door Showroom for ideas, log on to www.pella.com to schedule an in-home consultation or call (888) 84-PELLA (888-847-3552) for details on how to get started.

Courtesy of ARA Content

Related posts:

1. Lines of Credit vs. Loans: What’s the Difference?
2. Refinance Home Equity Loan To Get Most Out Of Property
3. Gimme Shelter – Why Your Home is the Best Tax Shelter You Have

“When you look at retirement assets through a tax lens, it becomes clear that decisions regarding whether you have an appropriate level of guaranteed lifetime income, how to maximize Social Security, whether you should work in retirement and how you deploy your assets are very much linked,” says Robert Fishbein, vice president and corporate counsel for Prudential Financial. “You should consider all of these elements in a holistic manner because, ultimately, the goal is to make sure your assets support your desired standard of living for the rest of your life.” 

Here are Fishbein’s top tax considerations for those planning for retirement: 

1 — Personal income tax 
Most people assume their personal income taxes will be lower after retirement because they won’t be generating as much income and, therefore, will be in a lower tax bracket. But due to the recent economic downturn and losses in retirement assets, the dismal personal savings rate over the last decade — which has only just recently begun to rise — and the decline of traditional pension plans, and the increase in the full retirement age under Social Security for those born after 1954, many retirees are choosing to take on part-time jobs. 

Regardless of the reason for working in retirement, the income earned, combined with use of retirement savings, might create a situation where you will be taxed at the same level or an even higher rate than when you were working full time. Keeping this in mind, it’s important to have both taxable and non-taxable retirement assets upon which you can draw in retirement so that you can manage taxes and maximize your income in the long term. Talking with a financial advisor is the best way to create a custom plan that will help you maximize the number of years you can generate income to maintain the same standard of living you enjoy today. 

2 — State and local taxes 
There’s a reason, besides warm weather, that people retire in states like Florida and Texas. Where you retire can have a significant impact on your after-tax income because state and local taxes can affect how long your retirement savings will last. Florida and Texas have a state income tax rate of zero, so they are attractive to many retirees who want to maximize their retirement assets. California, on the other hand, has the highest state income tax; residents there are taxed at 9.3 percent. 

In addition to state income taxes, there are sales and property taxes to consider. Some states derive more of their revenue from these taxes than from income taxes. You should understand how all of the taxes in the state and town in which you plan to retire will affect your income. 

3 — Future tax rates 
Another thing to consider when figuring out your post-retirement income is how federal and state taxes might change in the future. It’s hard to predict whether they will remain the same, be lower or increase. A good indicator of future federal income taxes is to look at history and take an educated guess. Doing so suggests that rates are at historic lows right now, which likely means an increase in the near future. An indicator of future state taxes might be the current budget position of the state, which, at the moment, suggests that many states may be looking to increase their income, sales and/or property taxes in the short term. 

What does this mean for retirement planning — especially in those critical five year periods just before and just after retirement? Basically, if federal or state taxes go up, your retirement savings and assets will be depleted sooner. You will have to save more to make your money last longer or you will have to adjust some of your spending habits. 

As you look down the road for retirement, think ahead to how taxes will affect you. Visit www.retirementredzone.com to learn more about planning for retirement. 

Courtesy of ARAcontent

Related posts:

1. Five Tips for Retirement Planning in a Challenging Economy
2. Newlyweds – Discuss Taxes and Other Financial Matters Now before Filing
3. Events in Life that Will Influence your Taxes

Fast forward to present day and you’ll find millions of middle-income Americans are now getting snared by the AMT. The main reason the AMT now reaches into the pockets of the middle-class is because regular income tax brackets are indexed for inflation but the AMT thresholds are not. The result has been the steady expansion of households who find themselves hit by the AMT — especially households with a large number of children, education credits, residential energy credit and/or state and local taxes.

Why haven’t Americans been clamoring for an immediate overhaul to the AMT? Thus far, the full effects of the AMT have been deferred by Congress enacting a series of temporary patches — boosting the amount of the AMT exemption.

The last temporary fix to increase the exemption, however, expired at the end of 2006. If Congress fails to ratify another provisional one-year increase in the next few months, the number of households paying the AMT will escalate exponentially from approximately 4 million in 2006 to nearly 23 million for 2007.

To determine if a taxpayer owes tax under the AMT, filers must calculate their taxes under both the regular tax and AMT systems — making the “Alternative Minimum Tax” tax a bit of a misnomer considering taxpayers must pay the higher of the two. The biggest factor impacting AMT filers is that they are no longer eligible to claim certain deductions and exemptions (i.e. education credits, child care credits, and the deduction for state and local taxes).

Sound complicated? It can be if taxpayers don’t plan ahead and use the tools that are available to them as a significant portion of taxpayers may be surprised when they are suddenly hit with a big tax bill, plus possible penalties come next April. Some planning tools are even free, such as the tool offered by 2nd Story Software, Inc., makers of the popular tax program TaxACT.

“It seems unlikely that lawmakers will fail to pass another patch to serve as a quick fix to hold down the reach of the AMT. Guessing wrong, however, could prove costly. Unfortunately, there are a vast number of factors that will trigger the alternative tax for any given taxpayer,” says Stephanie Behrends, spokeswoman for 2nd Story Software.

“TaxACT Preview is a taxpayer’s ally, allowing users to perform what-if scenarios to determine their estimated tax liability,” she says. “Users simply need to step through the TaxACT interview entering their forecasted income and deductions for the tax year by answering simple questions in layman’s terms. TaxACT simultaneously calculates your projected tax with the regular tax system and the AMT system based on the taxpayer’s tax bracket and the most recent tax information available.”

Visitors need only to complete the site’s free online registration to gain access to TaxACT’s Online Deluxe Preview version. The tools available at www.taxact.com allow users to generate a forecasted federal and state income tax refund or liability amount – which will provide valuable insight into their tax situation. Once the final version of TaxACT releases in early January 2008, users can easily finalize their tax return and print and/or e-file their federal tax return for just $9.95.

Do you have more questions regarding the AMT and how it may impact you? More information is available at www.IRS.gov — just enter keyword “AMT” or “Alternative Minimum Tax”.

Courtesy of ARAcontent

Related posts:

1. AMT “Patch” Passes Congress – IRS Processing of Some Tax Returns Delayed
2. Little Surprises the Alternative Minimum Tax (AMT) Can Pull on You
3. The Tax Increase Protection and Reconciliation Act of 2005 – What’s It Mean for You?

(ARA) – For most Americans, tax season means frustrating hours spent with piles of paper, but for identity thieves, this time of year provides an open-door opportunity to steal your personal information.

Identity theft is a crime that has gained momentum in recent years, claiming more than 23,000 victims each day. While it’s important to protect confidential information year-round, people are especially vulnerable to the crime during tax season.

From W-2 forms to old pay stubs and investment information, Americans send and receive a large quantity of confidential information that is a gold mine for identity thieves.

“Similar to the holiday shopping season, tax time provides a variety of opportunities for identity thieves,” says Jay Foley, executive director, Identity Theft Resource Center. “It is essential that consumers are cautious when handling their tax-related information.”

In recent years, more people have turned to electronic filing for added convenience. In fact, according to the IRS, the 2007 tax-filing season set a record for the number of electronic filers with more than 75 million tax forms filed online.

While e-filing may offer a simplified approach to an already dreaded filing process, it may also give consumers a false sense of security when it comes to protecting against the crime. Similar to mail filing, consumers must still collect necessary paperwork required to complete tax forms.

“The convenience of e-filing doesn’t decrease consumer’s vulnerability to identity theft during tax season,” says Nancy Heaton, senior global marketing manager at Fellowes, Inc., the leading shredder manufacturer. “In reality, the same amount of paperwork is required for tax back-up. That’s why it’s essential for consumers to shred any papers containing confidential information that are used to file their taxes.”

It’s also critical to properly store and destroy sensitive back-up documents used during tax season. Once you have determined what you need to keep and what can be destroyed, make sure you properly dispose of this sensitive information. Shredding is one of the most effective ways to get rid of confidential information you no longer need.

When destroying records, it’s best to use a shredder that features cross-cut capabilities, such as the Fellowes PS-77Cs, which ensures private information is reduced to small, unidentifiable pieces, making it nearly impossible for thieves to piece the information back together.

In addition to shredding, below are several tips people should consider this year to ensure tax season is more manageable.

Filing Taxes the Old Fashioned Way: Through the Mail
* Keep tax paperwork and other documents in a safe and accessible place, such as a fireproof box in your home.
* Regularly check the mailbox for W-2 forms and other documents containing sensitive information that arrive by mail. If you don’t receive these documents by Feb. 15, contact the IRS for assistance at (800) 829-1040 as missing forms may be an indication that an identity thief went through your mail.
* Send completed tax returns from a locked mailbox or the post office. If mailing from home, do not put the mailbox flag up. This only alerts identity thieves that there may be an outgoing check in the mail.
* Make sure tax forms, backup documents and enclosed checks are not visible from the outside. Try wrapping your forms in an extra sheet of paper to disguise the contents of the envelope.

Filing Taxes Online
* Choose a tax filing service you are familiar with. The IRS doesn’t offer software or direct filing, but it provides a list of approved companies at www.irs.gov/efile.
* Make sure personal computers are protected with updated firewall and secure software systems which contain antivirus and anti-spyware programs.
* If you are storing important tax-related documents on your computer, change your passwords frequently between December and April.
* Ensure that every Web site you are using during tax filing is encrypted to protect personal information when transmitted.
* Once you have submitted your tax forms, shred any information you no longer need.

For additional identity theft prevention tips and information on how long to keep financial records, visit www.fellowes.com or check with your tax professional.

Courtesy of ARAcontent

Related posts:

1. Knowing About What Is Identity Theft Can Help Prevent You From Becoming The Next Victim
2. Identity Theft Close To Home: Identity Theft And Mailboxes
3. Protecting You Identity Through Knowledge: Facts About Identity Theft

Whether you underestimated your withholdings or experienced an unanticipated bump in income, you wouldn’t be alone if you found that you owe money on your taxes. Owing a lot — or even just a little — can be stressful and burdensome, especially as the bill arrives while many are still paying off debts incurred during the holidays.

“The good news is, preparing to pay for a tax bill may be easier than you think,” says Stephen Semprevivo, president of LowerMyBills.com. “Many people can find simple ways to save some money that can then be used to pay off any taxes they might owe. Even if you ultimately find that you don’t owe anything, you can use the money you saved to buy yourself a treat or, better yet, to put away in savings.”

Here are five simple savings techniques:

1. Evaluate your entertainment expenses. Americans spend more on entertainment than they do on other vital expenses such as gas, furniture and clothing, according to the Bureau of Labor Statistics. Entertainment is one of the easiest areas in which to find savings. How much do you spend in a month on movies, restaurants and other outings? Simply staying home and watching TV, or eating your own home-cooked meal, can create substantial savings.

2. Reduce your rates – on everything from phone bills to credit cards. You may be paying more than you need to for simple monthly expenses such as insurance, cell phones or Internet service. Sites like LowerMyBills.com can help you search across multiple service providers to find low rates on these and other monthly bills.

3. Spend to save – really. Unless you’re willing to alienate everyone in your life, holiday gifts will always be an expense. Since you have to spend on holiday gifts anyway, do so wisely by taking advantage of seasonal sales. From post-holiday sales to Presidents’ Day to Easter, the months before tax season are full of opportunities to purchase – and save on – holiday gifts for next year. Next November, when everyone else is scrambling and spending, you will have the satisfaction of knowing your holiday shopping is done and that you saved money doing it. You can earmark those savings for paying next year’s taxes.

4. Minimize your mortgage payment. Right now there’s a lot in the news about adjustable rate mortgages that are resetting to higher rates – with bigger monthly payments. If you have an ARM that’s about to reset, or if you just want to get better terms on your fixed-rate loan, it may be a good time to consider refinancing. Sites like LowerMyBills.com can help you investigate your refinance options. Just be sure to read all the terms of your loan carefully, and if possible, consult a financial advisor or other professional.

5. Consider seeking professional help. If you even suspect you’re going to be facing a big tax bill, consider consulting a tax consultant or other financial advisor. These professionals may be able to help you find ways to trim your budget and set more money aside to pay your taxes. They may also be able to help reduce the amount you owe, or set up a payment plan with the government.

“It’s never too late, or too early, to start saving and preparing for tax season,” says Semprevivo. “With a few money-saving techniques, you may be able to save enough to cover your tax payments this year and put a little away to take care of next year as well.”

For more information on how to save money on your monthly bills, visit www.LowerMyBills.com.

Courtesy of ARAcontent

Related posts:

1. Easy Ways of Reducing Debts in This Time of Economic Crisis
2. Extra Precautions Help Prevent Identity Theft During Tax Season
3. Paying Current Bills While Paying Your Debt

In 2006, approximately four million households were required to pay the AMT. Without ratification of another provisional one-year patch to boost the amount of the AMT exemption, an additional 20 million households would have to pay an estimated average of $2,000 more in federal taxes for 2007. Another 27 million filers, who claim a variety of credits closely connected to the AMT (i.e. child and dependent care, education, residential energy and state/local taxes), were also in danger of feeling the AMT pinch.

Speculation that the start of this tax season would be delayed has been addressed by the IRS. The 2007 tax season will start on time for everyone except a small portion of taxpayers. Taxpayers who utilize five credit forms, however, will face IRS processing delays. The IRS has targeted Feb. 11 as the likely processing date for taxpayers filing the following:

* Form 8863 – Education Credits
* Form 5695 – Residential Energy Credits
* Form 1040-A, Schedule 2 – Child and Dependent Care Credit
* Form 8396 – Mortgage Interest Credit
* Form 8859 – District of Columbia First-Time Homebuyer Credit

Of the 22 million taxpayers who used tax software to prepare and electronically file their tax return last year, some may wonder, “Considering the number of last minute legislation changes, will tax software be current and reliable to use this tax season?”

To ensure taxpayers have the opportunity to submit their return, the IRS made all revised forms associated with the AMT available immediately to tax professionals and software companies who produce and support software and online services.

Good advice for taxpayers this tax season: use e-file. Those who submit their IRS return electronically will still fare better because, as the IRS works to process backlogged returns, returns received electronically will be processed faster.

“We encourage our customers who use e-file to enter their tax data into TaxACT and submit their electronic return as they would normally — the program is current and up-to-date. Once the IRS begins accepting returns, returns will be processed. TaxACT customers can rest easy knowing no other method will help them to get a faster tax refund — in as few as ten days,” says Stephanie Behrends, spokeswoman for 2nd Story Software, Inc. — makers of the popular tax program TaxACT.

“Those who e-file their tax return also receive “Proof of Filing” which is an acknowledgement issued to the filer reflecting when the IRS received and accepted the return. Conversely, if an error is detected, the IRS can communicate the problem fast – even pinpointing the location of the error in the tax return.”

Do you have more questions regarding the AMT and how it may impact you? More information is available at www.IRS.gov — just enter keyword “AMT” or “Alternative Minimum Tax”. To get a clear picture of the AMT’s impact on your return or for more information regarding TaxACT, visit www.TaxACT.com and start your free Standard tax return.

Courtesy of ARAcontent

Related posts:

1. Don’t Suffer the Alternative – The Alternative Minimum Tax, That Is
2. Filing Online – Tax Tips to Ponder
3. What You Can Do if You Make a Boo-Boo on your Tax Returns

In the U.S., the biggest tax write-off for many individuals is the interest paid on a property loan. Since they represent large debts, paid over many years, the interest is (for several years) the overwhelming majority of the total monthly payment. As a result, much of that interest paid can offset taxable income.

But there are other tax issues involved with other forms of debt that should be factored into planning.

Taking out a home equity loan used to be primarily for the purpose of making improvements to the property. Many people these days use that money for a much wider variety of goals. A HELOC (Home Equity Line of Credit) can be used to finance just about anything – an auto purchase, repayment of credit card debt… you name it.

One advantage of this type of debt is precisely the tax benefit. Just as with a primary loan, interest on a second mortgage or a HELOC is tax deductible. So, even when the interest rate is the same as a credit card (and they are often lower), the net result can be beneficial.

The only way to know for sure in your circumstances is to do the calculations. Online loan calculators are readily available that will help you do just that. Run through several scenarios to decide the effect in your case.

It’s possible to obtain a loan to pay for large medical costs. Some people pay for such things with a credit card, which is possibly the most expensive way to finance the debt. Sometimes that’s necessary; no ‘one-size-fits-all’ recommendation is possible.

Since much of the interest on such loans, and sometimes the medical expenses themselves, is tax deductible it can be worthwhile to finance the costs that way.

Interest on or amount paid to student loans, too, is tax deductible up to a point. Your circumstances will vary from another’s. Tax filing software is probably your best bet for calculating the pros and cons in your individual case. As you answer the ‘interview questions’ you can put in the amounts and follow the tutorial to determine the impact.

Whatever the example, whenever you are considering assuming debt – especially for large amounts – taking the time to evaluate the tax implications can save you substantial amounts of money. That can easily be worth a couple of extra hours of research, especially since you’ll be able to use that knowledge time and time again.

Related posts:

1. Debt Handling: Home Equity Loans: Pros and Cons
2. Debt Handling: Low Interest Credit Cards: Savior or Devil?
3. Debt Handling: Mortgage Refinance: Is It Right For You?

Ideally, taxpayers should claim the number of exemptions that will result in withholding as close to what they owe as possible.  It’s a good idea to review your exemptions once or twice during the year to determine if there have been any changes.  By checking your exemptions in early November you’ll have time to make any necessary adjustments by the end of the year.  A new W-4 form should be completed and submitted to your employer if any major changes have been made such as having a child, getting married or divorced, if you can no longer claim a dependent that you claimed on previous years, or if you received a large refund the year before.  There is a new sales-tax option available, which you can deduct either your state income tax or sales tax, whichever is greater.  This option allows you to deduct the actual state and local sales tax paid if the amount can be substantiated.  This is a great deduction for those in the seven states with no income taxes – Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming – and in the states with low income tax rates such as Tennessee.

Saving money is a state of mind and one that takes many people quite a while to adjust to.  By preparing your own income tax return you may save money, but it’s wise to keep in mind that errors you may potentially make can cost you some of your refund.  By making sure that you know which income tax form to use and checking for errors in your personal information you’ll save both time and money.  It’s wise to consider using tax preparation software as it is more accurate than self-preparation and is much easier to use and understand.  Take the most beneficial deduction possible depending on your circumstances, whether it means using the standard or itemized deduction to get the most out of your refund. 

You can determine which is best by doing the worksheet in your income tax instruction booklet.  Other tips include deducting a percentage of your mortgage interest and utilities if you have a home office as this may be considered as a business expense.  Medical expense deductions may be deducted if your employer takes your health insurance out after taxes and it’s more than 7 percent of your total income.  This includes dental and prescription costs as well.

Some of the easier ways to cut your tax bill include maximizing your pension or IRA contributions.  Also, it’s best to use any flexible spending account dollars by the end of the year or you’re likely to lose the money.  Non-prescription drugs can be paid for through flexible spending accounts, which help eliminates the paperwork from keeping track of all purchases.  If you pay your own real estate taxes, then it’s wise to make any payments, which may be due at the beginning of the year by the end of the previous year.  By also making your mortgage payment, which is due at the beginning of January by the end of December, the home lender will get your payment in the current year and this will add to your deduction.  If you’re contributing to a retirement plan such as a 401(k) or 403(b) plan it’s wise to check with your employer to determine if you’re eligible to make extra contributions.

Related posts:

1. Money Matters: Tips from a Pro About Taxes After Retirement
2. Tips on How to Greatly Benefit on Taxes by Itemizing
3. Helpful Hints on Finding Out if That Charitable Organization is Legit

There is a specific form that the IRS has released in order to perform just the exact function.  Corrections should be made on the Form 1040X.  It is a fairly simple form, as far as IRS tax forms go, and it has three separate columns on the paper.  There is one column designed to be filled out with what the individual originally declared, one column set to be filled in with the changes when it comes to the numbers used, and the last column is designed to be filled in with the correct information.  On the opposite side of the Form 1040X, the individuals simply needs to answer why they needed to change their information. 

Sometimes changes are performed due to the fact that the individual received a form late, and this would go on to affect their taxes.  If this is the case, it is important to attach a copy of the form with the Form 1040X that the individual is returning to the IRS.  This will help to substantiate the claim that the individual is making, effectively proving the case of the individual.  This is not always necessary, but it can dramatically reduce the risk of an individual getting audited, which is another situation that can fill a person with senses of foreboding and apprehension.  There are certain things that will affect a person’s odds of getting audited once they submit a correction.  For example, the amount that is changed and the specifics of what needs to be changed affect the odds of a person getting audited for the correction.  If there is anything that causes concern for the IRS agent as they are reviewing the corrections, they may be inclined to try to push forward with an audit of your taxes.

Proving the change ahead of time by attaching the proper documentation can show the IRS agent that you have backing for your claims, and this is typically enough to satisfy their curiosity and concern.  It also shows that a person is responsible enough to cover their bases when it comes to tax filing.  It is a good way to save time and energy. 

There is a statute on time when it comes to making corrections.  Typically, this time period is limited to three years.  In the end, this works out that a person has three years from the date that they filed their taxes in order to make corrections without receiving a penalty for doing so.  This is especially important for people that are trying to get a refund from the IRS.  If they file a correction to get a refund for taxes filed more than three years ago, they will likely not be able to get their refund from the IRS because it exceeds the statute of time.  A person no longer qualifies to get all of their money refunded to them after this time runs out.  It is not even possible for an individual to use that refund that they believe they were owed to offset future taxes, the refund is lost in its entirety.

Related posts:

1. AMT “Patch” Passes Congress – IRS Processing of Some Tax Returns Delayed
2. Events in Life that Will Influence your Taxes
3. The Downside of Taxes when It Comes to Self-Employment Work from Home?

Before you understand your own tax bracket, you need to understand how tax brackets work in general. Tax brackets are based on earned income totals and determine the rate of taxation of that income. The tax brackets ensure that income is taxed on a sliding scale, with the lowest earners paying the least amount of taxes. In the US, there are six tax brackets: 10%, 15%, 25%, 28%, 33%, and 35%. Tax brackets are adjusted every year to account for inflation. In 2006, a person with an income between $0 and $7,550 would be taxed at 10%, someone with an income up to $30,650 would be taxed at 15%, up to $74,200 at 25%, up to $154,800 at 28%, up to $336,500 at 33%, and a person who makes more than $336,500 would pay taxes at the rate of 35%.

What tax bracket you is said to be determined by your “last dollar earned.” That does not mean, however, that if the last dollar you earned puts your income at $30,651 that your entire income is taxed at the rate of 25%. Even though you would fall into the 25% tax bracket, your income would be taxed as different rates as it grew. For instance, if your income was $40,000, then you would be taxed at 10% for the first $7,550, then 15% for the income between $7,550 and $30,650, and then 25% for the income between $30,650 and $40,000.

It is important to note that your total taxable income is not the same as the net total of your salary. You have to add all of the income you received throughout the year, from work and from other sources, to come up with your taxable income total. That means if you have income from investments or inherited money, you have to include that money in your income to determine which tax bracket you fall into. Once you know your taxable income, you also have to figure out how much you can deduct from your income. When you subtract your deductions from your total taxable income, the figure you are left with is the figure that assigns your tax bracket.

If you are close to the borderline in a tax bracket, either up or down, it is important to plan accordingly. If you are very close to going up a tax bracket, then consider all of your other income streams accordingly. Maybe you don’t want to sell your house or sell your stock in this tax year, to avoid triggering an increase in your taxes. If you are close to moving down a tax bracket, consider making a charitable donation that you can claim as a deduction to put you squarely in the lower bracket. Remember that any shift in your income, up or down, can affect your tax bracket standing, so take it into account whenever you are making big financial decisions.

Going up a tax bracket isn’t the end of the world, and likely won’t have a significant effect on your income. However, why pay more than you have to? Know your tax bracket and keep it mind during your tax planning, to keep your tax bill to a minimum.

Related posts:

1. Tax Issues Concerning Disaster Victims
2. Income Shifting – Can you Benefit from this Tax Break?
3. Little Surprises the Alternative Minimum Tax (AMT) Can Pull on You