Did you know there can be additional tax savings to having a traditional IRA or any qualified plan? In any business entity that passes through to your personal return, plans deducted in the entity can normally reduce your income in the entity. 401Ks reduce an employee’s salary. Traditional IRAs and self employed plans are deducted before calculating Adjusted Gross Income.I know this was a mouthful, but if you are still awake, the key to all these items is reducing Adjusted Gross Income. AGI is used for many different calculations on your tax return. If you have deductible medical expense, reducing AGI will give you a bigger deduction. Same thing with miscellaneous itemized deductions, that catch all of items that don’t go anywhere else. if you are in the entertainment industry or a salesman for instance, you probably have some misc itemized. Reducing your AGI will give you a bigger deduction. There are certain credits that you can’t get over a certain amount of AGI.You not only do your reduce your income by your retirement plan contribution, you can possibly increase your deductions in other areas. Check with me to see if you qualify for any of these deductions. I will [...]
Brian’s Tax Musings
There are credits that make going to school a tax saving event. In addition to a deduction for student loan interest, there are also the American Opportunity Credit for people getting a 4 year undergrad degree and the lifetime learning credit for less than full time students or postgraduate degrees. See this link:http://taxes.about.com/od/deductionscredits/qt/education.htmThis will help bring down the cost of a college education a little bit.
Brian’s Tax Musings
On Friday I thought I was going to die! I was in between preparing tax returns and my computer told me my tax software had an update (had been telling me for 30 minutes in fact) so I said the dreaded (OK). The update hung up in the middle and it was affecting all the laptop systems. Super slow, could access the internet but things would hang up, and I couldn’t restart or shutdown. A computer friend of mine once told me if you can get your computer in safe mode you can usually get any hungup software to finish up, but I couldn’t do anything. I finally thought of (after 3 hours, I had to drive all over Southern Cal on Friday to clients) turning the laptop over and taking the battery out, unplugging it, then putting battery back in and turning on (duffus, should have thought of it earlier). It automatically went into safe mode because of how I shut it down and the software finished loading and I could reboot and everything was fine (whew!)