Monday, April 2, 2012

LOOK OVER YOUR INCOME TAXES AND SAVE A FORTURNE

I have always made out my own taxes ever since I was a high school student  and my Economics teacher showed my class how to fill out tax forms. In college I was a business major and I went on to MBA School. I of course had several classes in accounting, finance and, economics. I was a member of Sigma Iota Epsilon which is a business fraternity for exceptional business students. I also had additional professional training in real estate, insurance and, estate planning. I have also managed and owned several businesses over the years. I have also been a stock investor/trader for more than twenty years and an investor in collectables for more than 40 years. Still, every time I read through the IRS tax code books and booklets I learn new ways of saving and even making money from the tax code.

The only problem with the tax code is that it changes every single year. Therefore, planning on getting a tax credit or deduction from one year to the next is problematic since our elections are on a two year cycle and each new congress makes changes to the tax code. There is also a lag between a law being enacted and the same law being implemented. That is why you need to have a very competent tax professional to prepare your taxes and having a professional to rely on is absolutely imperative if you want to get all the deductions and tax credits.

The very rich who are very smart, have armies of accountants and attorneys making sure that they pay little if any taxes. Most people do not have the resources to hire people to examine their taxes for a zero tax or even a positive cash flow from the IRS. That’s why you should review your own taxes even if you have someone else make it out.

A cursory examination of your tax forms might find some mistakes your tax preparer might make but, if you take the time to read through the IRS books and booklets you might find even more ways to keep your tax bill low or even getting money back from the government in excess of what you paid in over the past year. Even if your tax preparer does a perfect job of filling out your taxes perhaps there might be some odd things you could use to decrease your tax burden.

I recommend that everyone read through all tax books and booklets that cover deductions and tax credits. Even if you don’t find any money in your examination of these tax books and booklets you might get some ideas on how to spend money in the next year that might save you a or make you some money.

Now if you have questions about your taxes you can ask either your tax preparer or contact the IRS. I have always found that individual IRS agents to be very informative and helpful.

Overall, you can possibly find some ways to save or make money by reviewing your tax forms both forms that are state and federal. Deductions and credits for home interest, medical costs, heating fuel costs, heating incentives (woodstoves, solar, wind etc.,) and various financial losses can help make your personal tax burden decrease. Financial losses might just be paper losses like those from limited partnerships or real estate and other depreciations. After reading through the IRS literature if you have questions don’t be afraid to ask the IRS. There may also be state and local deductions you might find when paying your local taxes.  Currently, Michigan allows many elderly and low income  individuals to receive up to 60% back on their homestead property taxes.

You might want to review the taxes you paid in previous years to see if you might get some money back. You have the right to file an amendment to your taxes over the past few years in order to get back money that the government owes to you.

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