Gray power: Start early in preparing taxes
Published 12:00 am Tuesday, January 24, 2006
In the tax and credits section, Jim Binnings CPA LLC of Helena, stresses to pay close attention to line 40 of the tax return. Do you itemize or use the standard deduction? If you use the standard deduction, your standard deduction goes up with age and certain disabilities. If you were born before 1-2-1941 or are blind, you get an additional $1,000 deduction. The deduction is $1,250 if you are single or head of household. It is unfortunate but the only way to determine if you can itemize your deductions is by using schedule A to complete the form. So gather up your receipts and take a look. Below is a partial list of things to remember.
1. Longterm care insurance is deductible with limits.
2. Health insurance premiums may be deductible.
3. The supplemental part of Medicare B is deductible.
4. Call your pharmacist and ask for a printout of all the prescriptions you paid for in
5. If you don&8217;t have state income taxes withheld because you are not working, look at the optional sales tax table and see how much you can deduct for general sales taxes.
6. Property taxes go up every year. How much is yours?
7. Home mortgage interest is still the No. 1 deduction on schedule A.
8. Does your church keep up with your donations?
These are only a handful of potential deductions you could have. Add up your deductions and see if the total amount here is greater than the standard deduction. If it is, it was worth the time filling out schedule A because you have more deductions and should itemize instead of using the standard deduction.
Also in this section is a line for child and dependent care expenses. If you paid someone to care for your disabled spouse, disabled dependent or qualifying child, you may be entitled to a credit. Next, look at the credit for the elderly or disabled. You may be able to take this credit if by the end of 2005 you are 65 or older or you retired on permanent and total disability and you had taxable disability income. However, the taxable income limits are so low they usually keep most taxpayers from using the credit. Next, look at the retirement savings contribution credit. If you made contributions to a retirement account and your taxable income is within limits you may be able to use this credit.
If when you have completed the return you are due a refund, my advice is to put your bank account information on lines 73b, 73c and 73d.
Many businesses will offer you quick refunds for a fee. If you fill in lines 73b, 73c and 73d you will get your refund deposited into your bank account in two to three weeks. This is easy and safe.
Start gathering your tax information early in the year. If you get organized early, you will have time to get all the deductions to which you are entitled.
If something keeps you from filing yours taxes on time, relax. You can file for an extension if certain conditions are met.
Dr. Marvin Copes serves as a volunteer for AARP. He can be reached at mailto:firstname.lastname@example.org.