Top Tax Tips for 2010

Tax season has come upon us. And although you still have till the middle of April to file, you may want to file a little sooner this year. The federal government is offering many tax credits and deductions that can help you and your family save a lot of money and maybe even put some in your pockets. Listed below is my top three tax tips for 2010. I find that these tips are very important, and can help you this tax season.

Tax Tip #1

If you purchased any type of home repair items, you might want to check the list of approved tax credit home energy improvement purchases to see if your items can get you a tax credit. The purchases must be for an existing home, and your primary residence to receive the credit. If you did purchase an item that is eligible for the energy tax credit, you can receive 30% of the total purchase, up to $1500. Most credits are for new windows, heating, cooling, ventilation, insulation, roofs, water heaters, doors, and skylights. For a full list of items, visit www.energystar.gov. If your items qualify, you will have to fill out a form called the 8909 form, and you can download this at http://www.irs.gov/pub/irs-pdf/f8908.pdf.

Tax Tip #2

First time homeowners who purchased a home in 2009, can get you a tax credit of up to $8,000, or 10% of your homes purchase price. To qualify for this credit you should be a first time homeowner, it must by your primary residence and you will have to file a paper tax return for 2009. The 5405 form must be filled out to get your refund. If you purchase a home by April 2010, and close the purchase by July 2010, you can still claim the tax credit either on your 2009 or 2010 tax return. You may also claim the tax credit if you can prove through bank documentation, that you purchased a home after living in a house you owned previously for five consecutive years in an eight year period. For more information, visit http://www.irs.gov/newsroom/article/0,,id=204671,00.html, where you can get detailed information right from the federal government.

Tax Tip #3

If you prepare your taxes online through companies like Turbo Tax, H&R Block, etc, then you should know that you can prepare your taxes online for free and efile your federal. In most cases, each website allows your Adjusted Gross Income to be no more than $57,000, some may be lower. Some companies may ask for a fee to prepare your state taxes, but you can continue without filing your state return with the free company you chose and prepare those separately on your state's website or through the mail. Some companies may not have all of the forms that you may need to prepare your federal taxes. If you have any questions ask the company that you select to do your free federal tax return and efile. If you don't know if you may qualify for the free filing, visit this website, http://apps.irs.gov/app/freeFile/jsp/wizard.jsp?ck and answer the questions to see if you qualify. Once you submit your answers, a new page will display. It will list all of the companies that offer free filing, and will list the state tax forms that they have available. You can then chose the company you want and it will take you directly to the site to file your tax return online for free.

Tax Tip #4

Filing your taxes on your own is the best decision you could make if you use the 1040EZ and 1040A. Each tax company online guides you step by step during the entire process. You will be asked about your personal and family information, questions about your income, a guide through all the credits and deductions available this year, and they even take you through the state, local, and school taxes. If you are looking for convenience, a lower fee for efiling, and don't mind waiting the 8-10 days for your taxes to be deposited in your bank account, then doing your own taxes online is the best way to go. If you are worried about errors and audits, not to worry, turbotax and other companies offer you a low fee, worry free program, where you will not be responsible for any errors or problems with your tax return. Try www.turbotax.com, and check out their products. You don't have to pay until you are ready to efile your return.

Tax Tip #5

Read your tax booklets and read the online publications on www.irs.gov. Here you will find all the information you need to know about anything to do with taxes. Reading your tax booklets from front to back will give you a better understanding of how taxes work, how you can use the credits and deductions, and how to file. Depending on how you file, can decide how much you owe or how much you get back. Getting as much information as you can from the tax booklets and the irs website, you can find the best route to go for you and your family.