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02.12.2010 / 6 Ways to Save on Your Taxes

Tax season is now upon us again. To give you some aid this year, we have put together six tax-filing blunders that could cost you money and increase your risk of an audit.

"We have put together six tax-filing blunders that could cost you money and increase your risk of an audit."
  1. Not filing as head-of-household if you qualify. You probably qualify if you’re single, have a non-adult child living with you and that child pays less than half of his or her support expenses. You may qualify for this more-favorable filing status in certain other situations, so ask your tax adviser.
  2. Skipping your baby’s Social Security sign up. When your new little bundle of joy arrives, apply for a Social Security Card right away so you can claim your personal exemption. Use Form SS-5, available from the Social Security Administration or visit their web site at ssa.gov. You can also call them directly at 1-800-772-1213.
  3. Missing your mortgage points deduction. If you bought an existing home in 2009, you may be able to deduct mortgage points paid by the seller. Likewise, if you sold your home in 2009, you may be able to deduct a portion of any points you paid during a previous refinance.
  4. Misplacing donation receipts. If you make tax-deductible contributions of $250 or more, you need to have receipts on-hand when you file. Otherwise, the IRS won’t allow the write-off.
  5. Disregarding your 1099-R form. If you made a tax-free retirement-account rollover in 2009, you’ll receive a 1099-R distribution form. On your return, enter the taxable amount shown on the form, even if it’s zero, and write “rollover” next to it. Leaving the space blank raises a red flag with the IRS.
  6. Not filing because you can’t pay. So you owe taxes and you can’t afford to pay them. That’s no reason not to file your return. Instead, file by April 15 without full payment, or apply for an automatic extension. You’ll pay penalties of about 1 percent per month with either choice, but that’s better than the roughly 5 percent per month you could be charged if you do nothing.

For more tax saving strategies*, tools and resources, visit First National Bank’s online Tax Center at www.firstnational.com and click on Tax Center. You can also visit http://www.irs.gov, and click on “Individuals.”

*This article does not constitute legal, tax, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material.

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