How to Cut Your 2010 Income Taxes

Before you know it we will be preparing our income taxes for the year 2010. Although the year 2010 is coming to a close, there is still time for you to take the necessary steps to save money on your 2010 income taxes. Once you learn the basics and put them in place, you will be set for all of the years to follow.

How to Cut Your 2010 Income Taxes - Tip #1

This is simple, it is called organization. If organization can help you cut your taxes, don't you think you should give it a try? Start now and work backward to January 2010. Find all of the receipts that you think you will need. Next, go out in the garage or down in the basement and find a cardboard box. Now put all the receipts in the box - put a big label on it saying - TAX RECEIPTS 2010. Keep the box in your office or in a corner of the bedroom. Put it where you will see it and remember why it is there.

As you come across more receipts, which you will, add them to the box. If you do itemized deductions, you know what items can be claimed and what receipts you need. Any receipts pertaining to those items, throw in the box. When statements come in the mail telling you how much interest you earned, put those receipts in the box as well.

Next year start organizing earlier - get that empty box and label it TAX RECEIPTS 2011 and start adding the necessary receipts starting January 1, 2011.

How to Cut Your 2010 Income Taxes - Tip #2

Contribute to a tax deferred retirement account:

* For the year 2010 you can contribute $16,500 to a 401I(K) account. If you are over 50 years of age you can add another $5,500 to that.

* For an IRA (Individual Retirement Account) for 2010, age 50 and younger can put in $5,000, older than age 50 can put in $6,000.

How to Cut Your 2010 Income Taxes - Tip #3

You can save money if you itemize deductions. Be sure to know what you can legally claim as a deduction. If you own a home and pay mortgage payments, you can claim the interest you paid throughout the year. You can also claim real estate taxes. Other deductions include donations to places such as Goodwill and the Salvation Army.

Be sure to get a receipt for the items you donate. A receipt is an IRS requirement. If you have some furniture, lamps, clothing or other items that you plan to donate, do it now before the end of 2010. You can then put your receipts in that big box I talked about in Tip #1.

How to Cut Your 2010 Income Taxes - Tip #4

If you installed energy efficient windows, doors, insulation or purchased energy efficient appliances or put in a new heating and cooling system - you can claim up to 30% of the cost, or a maximum of $1,500. This tax credit is a win-win situation; you save on your taxes and make your home more energy efficient which saves you all year long. Click here for more information on this program.

There you have 4 very simple tips that tell you how to cut your 2010 income taxes. With a little planning and thought, you can keep more of the green for yourself.

Now go find all those receipts and get busy saving money on your 2010 income taxes.

Source:

Personal experience

AARP.org