Benjamin Franklin said, "Nothing is certain
except death and taxes," and some would respond that at least
death isn't an annual recurring event. Here are some tips that
might take the bite out of that annual recurring event.
Tip 1.
A student or parent can claim up to a $2,500 student loan
interest deduction on their 2002 tax return if their Modified
Adjusted Gross Income (MAGI) is below $50,000 for individuals
and $100,000 for joint filers. Above these amounts the write-off
is phased out.
Tip 2.
Reduce your taxable income by transferring a portion of your
salary into a flexible spending account (FSA) set up by your
employer. These accounts funded with your pretax dollars can be
set up for medical expenses or dependent care, and as you incur
expenses, the fund reimburses you.
Tip 3.
A medically required diet and exercise program is deductible if
it is prescribed by a doctor to alleviate a specific medical
problem such as high blood pressure, diabetes, arthritis and
even obesity. A membership at a gym or exercise club is
deductible with the same prescription.
Tip 4:
A special break for refinancers; if you took a cash-out
refinance for more than the balance of your previous mortgage
and used some of the extra money for home improvements, you can
deduct a proportionate share of the points on your tax return.
You can also deduct the balance of any unused points from a
previous refinancing.
Tip 5:
Take the time to add up your charitable contributions, personal
property taxes, interest from your mortgage statements, real
estate taxes, and state and local taxes from your W-2 form. If
the total is more than your standard deduction, ($7,850 for
married filing jointly, $6,900 for heads of household, $4,700
for single filers, and $3,900 for married filing separately),
you will save money on your taxes by itemizing this year. Note:
These figures are for 2002.
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Article by Naomi Knudsen
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