| FSI Tax Corp is alerting taxpayers to end-of-the-year | | | | taxpayers can take a credit for: |
| actions they can take to reduce their 2006 tax bills. | | | | • Energy efficient home improvements, like |
| After the New Year, it will be too late to take | | | | insulations of windows and doors. |
| advantage of many tax-saving opportunities, such as | | | | • Solar energy equipment for residences. |
| reducing 2006 income, exploring available tax credits | | | | • Hybrid, fuel cell and other energy-saving or |
| and pursuing all legitimate 2006 write-offs. | | | | alternative energy using vehicles. |
| 1. Minimize your income | | | | • Other energy equipment purchases, such as |
| Because you are taxed on your yearly income, the | | | | electric heat pumps and water boilers. |
| simplest way to decrease your tax bill is to decrease | | | | 3. Deductions |
| your income. It may not sound like that’s a | | | | In addition to delaying income and taking advantage of |
| strategy that could save you money, but postponing | | | | tax credits, loading up on deductible expenses in 2006 |
| income until 2007 can reduce your taxable income for | | | | can also reduce your taxable income. Taxpayers need |
| 2006. | | | | to be careful to only include legitimate deductions |
| If you have clients, you can delay your invoices or | | | | because every deduction will be scrutinized by the IRS. |
| push back due dates until after January 1, 2007. Unless | | | | Here are a few ideas: |
| a financial hardship requires immediate funds, wait a | | | | • Prepay your state and local taxes. If you |
| couple of weeks. It won’t count as income if you | | | | withheld state and local taxes this year, and you plan |
| don’t receive it during this year, but you will still | | | | to itemize, it would be advantageous to prepay the |
| receive what you are owed. You will give your clients | | | | taxes now and the payment will count as a federal |
| a needed break over the holidays and your patience | | | | deduction. |
| will pay off in April. If you are an employee, see if your | | | | • Increase your 401(k) contribution to cut your |
| employer can delay your holiday bonus until after the | | | | taxes and increase your retirement savings. Some |
| New Year. | | | | 401(k) plans permit “catch-up” contributions |
| 2. Tax Credits | | | | in lieu of yearly contribution maximums. According to |
| People tend to focus on deductions more than tax | | | | SmartMoney.com, a taxpayer in the 28% tax bracket |
| credits when it comes to planning for tax season. | | | | can save $280 by contributing an extra $1,000. You |
| However, there are many tax credits available that, if | | | | are getting paid to save! |
| you qualify, can save you a lot on your tax bill. Below is | | | | • Include additional deductible mortgage interest |
| a list of tax credits; detailed explanations of each credit | | | | by paying January’s mortgage bill now. |
| can be found on the IRS website. | | | | • Don’t postpone paying tuition and |
| • Retirement Savings Credit: Available to low to | | | | university fees. Pay for next year’s education |
| moderate income level taxpayers who contribute to a | | | | now and save. In some states, contributions to your |
| retirement savings account. This credit can save up to | | | | 529 college savings plan can also be deducted. |
| $1,000 or $2,000 if filing jointly. | | | | 4. Donate to Charities |
| • Credit for Elderly or Disabled: Taxpayers | | | | The holiday season is a “season of giving” |
| earning a limited income may qualify for this credit if | | | | and a great time to donate to your favorite charity. |
| over 65 years old or permanently disabled. | | | | Not only does it feel good to give to the less fortunate, |
| • Adoption Tax Credit: If you adopted a child this | | | | but you can help yourself by donating before January |
| year, you may be eligible for this credit which repays | | | | 1st and including the contribution on your 2006 tax |
| adoption expenses up to $10,639 in 2006 or about | | | | return. For more information on charitable donations |
| $5,000 for each adopted child. | | | | visit [ |
| • Child Tax Credit: Low-income parents with | | | | You can also donate stock to charity, avoid paying |
| children under 17 years old may qualify. | | | | taxes on the appreciation and deduct the full value of |
| • Child and Dependent Care Credit: This is for | | | | the stock. |
| parents who have children under 13 and place their | | | | For taxpayers looking for maximum generosity and |
| children in daycare or with babysitters so the parents | | | | time to consider how to give back, a donor-advised |
| can work. | | | | fund may be the answer. For a contribution of at least |
| • HOPE Credit: Students may qualify for a tax | | | | $10,000, you can deduct the entire amount now and |
| credit of up to $1,500 for tuition and fees assistance. | | | | disperse the funds over time. |
| • Lifetime Learning Credit: A credit of up to | | | | In a Nutshell |
| $1,000 for which students (including part-time students) | | | | There are many ways to work the tax system in your |
| and students not in school due to pursuing a | | | | favor, as long as you are willing to roll up your sleeves |
| post-secondary degree or for a business purpose | | | | and dig into the details. These last-minute, year-end tax |
| may qualify. | | | | tips are a good starting point. |
| The Energy Tax Incentives Act was signed into law in | | | | Contact: |
| August, and while critics of the law argue it is aimed at | | | | FSI Tax Corp. |
| providing benefits to big energy companies, it also | | | | 9212 Berger Rd. |
| includes tax credits for consumers. Under the new law, | | | | |