You can pay fewer taxes by utilizing tax breaks that come with income taxes. Some claim it is cheating to get a tax break, but it's not. Every incentive you meet the requirements for are yours, guilt-free, and by not accepting tax breaks you are doing yourself a financial disservice. The Judge Learned Hand said that "There is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike, and all do right, for nobody owes any public duty to pay more than the law demands".
Follow these five simple rules when researching tax breaks:
1. Do not falsify information. If certain income exemption, deferment, or cancellation is not applicable, taxes must be paid on that income. Attempting to conceal, change, or make changes about how much money you have made is almost a guarantee that you will be audited, fined, and in some cases, arrested.
2. Obey the spirit as well as the letter of the law. Congress creates doesn't create tax breaks just to be nice. Sometimes they want to boost the economy, sometimes they want to save the environment - whatever the reason, make sure that it applies to you. Bending tax law to fit your situation can be illegal. If you're not sure, consult a tax professional.
3. Tax credits should always be chosen before deductions. Tax credits reduce the amount that you have to pay on your taxes overall while tax deductions just reduce the amount of income you can be taxed on. It makes more sense to choose a tax credit because if you get a large deduction on your taxes, for example $1000, then you still have to pay a certain percent of your taxes with that $1000 subtracted out. It would make more sense if you just accepted a $1000 tax credit you would likely save more because it is a lump sum since if you accepted a deduction you would only see a certain percentage of the $1000 actually taken off of the amount you owe.
4. Make certain you are filing the correct form; for some tax breaks, only a particular tax form will work. Not every taxpayer may file the simplified forms 1040A or 1040EZ. You may need to file the long form 1040. Read all instructions carefully, and if something is unclear, consult a tax preparation professional.
5. Always be sure to watch out for the alternative minimum tax (AMT). It is also known as the "shadow tax system," mostly because it does not follow the same rules as regular income tax. It was made in order to keep a certain minimum tax on people no matter how many deductions one qualifies for. Depending upon your income and type of income you may still have to pay the AMT.
You can begin today - find out what tax benefits you qualify for and start taking a "break" from high taxes!
Whether you are looking to invest, or already own a home that is, or may be designated a heritage building, there are several guidelines to be aware of before you begin making any changes to your property. The National Heritage Preservation Service provides these guidelines to help communities identify, evaluate, protect and preserve historic properties for future generations of Americans.
As a homeowner it is important to follow these standards to qualify for "certified rehabilitations" and maintain eligibility for rehabilitation tax credit. Certified Restoration is the alteration of or addition to a historic property while retaining a property's historic character.
To qualify as having performed, "certified rehabilitations" on your property, here are just a few of the national guidelines that should be followed. For a complete and illustrated guide for Rehabilitation, Restoration, Reconstruction and Preservation, refer to the secretary of the Interior's standards for the treatment of historic properties:
- Your property should be used for its original historic purpose. That is if you are rehabilitating an Eichler home, for example, it must be still designated as a single family home to qualify. If it is to have a new use, minimal change to the defining characteristics of the building and its site are necessary to qualify for a certified rehabilitation.
- Alteration proposed must preserve and retain the historic character of the home. In the case of an Eichler home, the Eichler home owner who want to qualify for a certified rehabilitations cannot put on a second story, repave an atrium with anything other than concrete, or place windows in the front walls. These are original architecture that define the character of the Eichler home.
- New additions or construction must not effect the original integrity of the building. That is, the essential form and integrity of the historic property must be left intact when under taking additions.
- Historic features that have deteriorated over time should ideally be repaired rather than replaced. If the deterioration is unquestionably sever, a feature can be replaced, but it should match the original design in texture, color and materials. To hearken back to the Eichler home, this means worn-out wood wall paneling needs to be replaced with new paneling, ideally of the same type and grain.
These are just a few of the ten principle guidelines for certified rehabilitations set out by the National Heritage Preservation Service. Help protect the nations' irreplaceable cultural resources and ensure that you are getting as much support as possible while you care for and protect your heritage building.
Both Ron Finkelstein & Jake Marsh are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.