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Tax Tips for Big Savings

April 18th is just around the corner and if you are like my husband and me, you may have been putting off the inevitable.  But just because you have to file a return does not mean that you will necessarily need to pay Uncle Sam big money.  There are several tax tips to make sure that you are doing everything possible to lower your tax bill.

Tax Tips #1: Deductions

Take a second look at your tax return. You may just be able to deduct more from your taxes than you realized to start with. Remember that you can deduct items like uniforms you bought for a job and mileage that you used for any business endeavors. Even the space in your home that you designated solely for a business use can lead to a big deduction.  For example, I was able to deduct the office space I use for blogging and my new laptop as a business expense since I only use that space and my laptop for blogging.

Tax Tips #2: Remember Your Losses

No one likes to admit defeat but at tax time, your losses can save you some serious money. Be sure to claim any losses that you took during the year on your investment portfolio including all stock and mutual fund investments. Remember to also write off any real estate losses or losses from theft.

Tax Tips #3: Use Your Tax Credits

There are a bunch of tax credits that you may not realize that you are eligible for. For example, someone that bought their first home between January 1, 2009 and April 30, 2010 for less than $800,000 may qualify for a tax credit worth 10% of the new home’s value up to $8,000 if they will live in the new house for more than 3 years.

Also, repeat home buyers who bought a new home valued at less than $800,000 between November 6, 2009 and April 30, 2010 after living in their previous house for at least 5 consecutive years may qualify for a tax credit worth 10% of their new home’s value up to $6,500.

Tax Tips #4: You Can Still Contribute to your 2010 IRA

Even though we are well into 2011, it’s still not too late to make a contribution to your IRA for 2010. You have until April 18th to max out you’re your contributions for 2010. Why should you miss out on a potential tax deduction that can help you trim your tax bill?  Take advantage of the tax savings and save for your future at the same time.

Mr. BFS and I are taking advantage of this extra 4 months to fully fund a second Roth IRA for 2010, but since that involves post-tax contributions, we won’t be seeing in tax benefits right now.  I still love that extra 4 months though…

I hope this little reminder helps.  Mr. BFS actually went to file taxes online last weekend after reading Freetaxusa reviews and we personally did save a ton by following our own advice.  The hardest part was choosing between the Tuition and Fees Deduction and the Lifetime Learning Credit to see which one would benefit us the most thanks to his graduate school expenses last year.  It was a nice problem to have and led to a $200 refund despite my blogging income.  Yay!

What great tips have I missed?  What deductions and credits would you suggest paying the most attention too?

21 thoughts on “Tax Tips for Big Savings”

  1. AJ

    Another deduction that we just found out about- $13,000 adoption tax CREDIT! We didn’t personally adopt this past year, but our friends did, so I told them about it. They talked to their CPA and ended up with $26,000 back from the feds (they adopted a sibling set).

    What a great way to start those kids’ college funds!

  2. Buck Inspire

    Thanks for the reminder! Just curious, do you guys do your own taxes?

  3. Buck Inspire

    Sorry for the spam, feel free to edit and delete one. I meant to ask if you do your own taxes, which tax software do you use or do you do it by hand? Thanks!

  4. Crystal @ BFS

    @AJ, that’s a great find!!! I bet your friends really appreciated it! 🙂

    @Buck Inspire, we did our own taxes from 2005 and 2006 using free online software since we had a simple return (TaxAct is great). Then we made our biggest financial mistake and lost $15,000 in a friend’s business and needed to take the loss over 3 years, so we hired a CPA for our 2007, 2008, and 2009 taxes. She cost WAY too much (like $400-$500), so once the strange stuff had been handled, we went back to doing our own this year (2010’s taxes).

    My husband did them by hand, on paper, last Saturday and then input our info into an online program too that I won at FMF to check himself (he was dead on). We’ll be doing it by hand as long as Mr. BFS is up to it since it really is so much easier to understand for us both. 🙂

  5. krantcents

    Some good ideas, however unless the IRS changed the rules, only work clothes are deductible. They must be uniforms that cannot be used for something else. Job search expenses are deductible such as resumes, postage, etc.

  6. Everyday Tips

    All I know is that I need to get my taxes done soon!!!

  7. Don’t forget to add the making work pay credit which is still in effect for this year. It’s $800 for most couples.

  8. retireby40

    I did most of my tax yesterday and we’ll owe some money to Uncle Sam as usual.
    I still need to input a few more stock transactions (+) and deduct blogging expense, but I think that’s all I have left to do.

    You can still contribute to 529 to get state tax deduction also.

  9. Crystal @ BFS

    @krantcents, thanks for the heads up – I will correct the post!

    @Everyday Tips, good luck!

    @Bogey, I have to look into that…

    @retireby40, good advice about the 529. Texas doesn’t have a state income tax (we have an 8.25% sales tax in my area), so I always seem to forget that some other states do. 🙂

  10. Denise @ The Single Saver

    These are good tips. One thing that people always seem to forget to do is to write off their donations to thrift stores… that bag of old shirts and shoes can add up to a pretty nice deduction!

  11. Evan

    You will be back to using a CPA next year! You are going to be running your online empire as a business (possibly incorporating/LLC it)

  12. Crystal @ BFS

    @Denise, oh good point! For anybody who itemizes their deductions, every little bit adds up to some real savings!

    @Evan, our plan is to continue using the Schedule C like we did for 2010. But yes, if my blogging empire gets to be humungous, we may find another CPA. 😉

  13. First Gen American

    I finally started mine this weekend. I’m surprised you still do your own with your blog income. I’m sure it’s starting to get complex now.

  14. Ricky

    Great post, its that time of year isnt it, and once you have dealt with taxes you almost feel like you deserve a holiday! The rule for work clothes; that they cannot be used for anything else, is ridiculous! Thanks for sharing!

  15. income tax preparation

    One of the best, and most abused, tax credit is the Earned Income Credit (EIC). Unlike other tax credits, the EIC is credited to your account as a payment and that means the EIC often results in a tax refund even if the total tax has been reduced to zero. You may be eligible to claim the earned income credit if you earn less than a certain amount.

  16. Furniture Stores in Los Angeles

    Ah! Thanks so much for the tax credits link!

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