March 2010 LIVING IN AMERICA-TAX WRITE OFFS YOU DIDN'T KNOW

The most popular tax write offs are to participate on the retirement paland and health savings account offered by your employer. Avoid early withdrawal on traditional IRAs (subject to additional 10% tax) and other qualified retirement plans except when you use it as a first time home buyer, certain medical or educational expenses, or if you are disabled.

Gambling winnings are always taxable income reported on line 21 of Form 1040. You may NOT use Form 1040A, Form 1040. You can not deduct gambling losses that are more than your winnings and provide receipts , tickets, statements or other records showing both your winnings and losses.

If your Social Security benefits were your only income for 2009, your benefits are not taxable and you probably do not need to a file a federal tax income return. If you received income from other sources, your benefits will be taxed unless your modified adussted gross income is more than the base amount for your filing status.

Quick computation whether some your benefits may be taxable: First, add one half of the total social security benefits you received to all your other income, including tax exempt interest and other exclusions income. Then, compare this total to the base amount of your filing status. If the total is more than your base amount, some of your benefits maybe taxable.

The 2009 base amounts are:
$32,000 for married filing jointly
$25,000 for single, head of household, qualifying widow/widower with dependent child or married filing separately who dinot live together anytime during the year.
$0 for married filing separately who lived together during the year

THE FOLLOWING CAN LOWER YOUR INCOME TAXES:
First $2,400 unemployment compensation deduction
Educator expenses for teachers
Employee business expense not reimbursed by employer
Health savings account deduction form 8889
Moving expenses on form 3903
One half self employment tax
Self-employed SEP, SIMPLE and qualfied plans
Self-employed health insurance deduction
Penalty on early withdrawal of savings
Alimony paid
IRA deduction
Retirement savings contribution credit fomr 8880
Student loan interest deduction 1098-E
Education credit form 8863 1098-T
Tuition and fees deduction
Foreign earned income form 2555
Jury duty pay given to employer
Health savings account & Archer MSA deduction
Health coverage tax credit (HCTC) received 65% of premium paid
Born before Jan 2, 1945 and legally blind deduction
Foreign tax credit credit form 1116
Credit for child and dependent care expenses form 2441
Credit for the elderly or disabled schedule R
Child tax credit
Making work pay and government retiree credit
Earned income credit
First time home buyer credit for ling time resident home buyer credit
Sales or excise tax paid on energy efficient or car deduction between 2/17/2009 & 1/1/2010
Medical and denta deduction in excess of 7.5% of AGI

I am more than willing to assist you for more details on the above topics or if you may have questions on other topics like on Schedule A, Schedule C, Schedule E, 1099-C and 1099-A. Do not hesitate to ask me or you can visit http://www.irs.gov/

Mar Dimes
Tax Preparations, Accounting/Bookkeeping, Payroll and All Tax Reports
tel 916-627-5970