The Internal Revenue Service has made many changes this year to save taxpayers money. The IRS has released a promising statistic regarding the 2008 tax year. So far, the average Federal refund for early filers has increased $200. (The average refund in 2007 for tax year was $2,429.
This quick quiz will help you find out if these changes could affect your refund and deductions.
Question 1: Have you experienced any major life changes during 2008?
Major deductions can be caused by job changes, marriage, divorce and childbirth, as well as relocation, bankruptcy, and other life events. If you are a taxpayer who did not receive the Recovery Rebate Credit last year and had a significant life change that has significantly affected your financial situation, the Recovery Rebate Credit may be available to you.
Question #2: Are you a homeowner?
Are you looking to buy a new home or refinance an existing one? Are you a homeowner who has installed a clean fuel energy source like a wind turbine or solar panels, fuel cells, or geothermal heat pumps? Additional relief may be available for those affected by hurricanes, flooding, wildfires, or storms.
Question #3: Have you donated cash or other non-cash items last year to charities?
Find the receipts if you have them. Ask the charity for receipts or request a copy from your credit card company. Find out the cost of non-cash donations. This can be done using one of the most popular tax-preparation software programs. TaxACT Deluxe’s Donation Assistant provides value for over 700 charitable donations, which are IRS-approved. It also comes with a 100 percent audit guarantee.
Question #4: Have you contributed to a retirement plan?
Low-income and moderate-income taxpayers could be eligible for a credit up to 50 percent of the $2,000 they invest in a 401k, 403(b), SIMPLE, SEP, SIMPLE or Governmental 457 plan. Joint filers with adjusted gross incomes (AGIs), up to $53,000 and single taxpayers with AGIs of up to $26,500 are likely to be eligible.
Question #5 – Do you work but earn a lower salary?
25% of taxpayers who are eligible for the Earned Income Tax Credit do not claim it. This credit could be worth up $4,800 each year if you’re eligible. In general, AGI and earned income must be below:
– $38,646 ($41.646 married filing together) with two or more qualifying kids
– $33,995 ($36.995 married filing jointly), with one qualifying child
$12,880 ($15.880 for married filing jointly) without qualifying children.
You’ve now got the tools to save money, so file your taxes. The faster you file, the quicker you will get your refund. You may be eligible to pay your taxes in small installments, or get a short-term extension if you owe money.
These tips can make it easier to prepare your taxes.
– Check www.IRS.govKeep checking back on a regular basis to receive the most recent tax news and tips. This year, you may find the details about the Earned Income Tax Credit or Recover Rebate Credit particularly helpful.
Use tax-preparation software. TaxACT and other leading products allow you to trial them completely free. TaxACT is a great product that allows you to prepare, print, and e-file your federal returns for free. Then, you can quickly complete your State return and file it for only $13.95.
– You can electronically file your return. It is fast, easy, and secure. With direct deposit, you can receive your refund in as little as eight days.
Further information regarding the IRS tax changes in 2008 can be found here www.IRS.govYou can find information and help about TaxACT products at www.TaxACT.com.
