It is not necessary for you to wait till April, 15th, 2013 to start preparing for your taxes. You can take tax preparation steps now and claim your refunds. If you miss out on the due date, you may be liable for paying penalties.
Tax deductions:
Some of the tax deductions that you should keep in mind while preparing your taxes include:
Itemized Deductions: It should be noted that there are many tax payers who go for standard deductions rather than the itemized deductions (like - mortgage interest, charitable contributions, state and local taxes, etc). These people are actually losing out on money. If you find that your deductible expenses exceed the 2012 standard deduction limits, then you can surely itemize the deductions to get the write-offs.
Miscellaneous deductions: If your tax-preparation fees, job-hunting expenses, business car expenses as well as professional dues are more than 2% of your adjusted gross income, then you will be able to deduct them.
Mortgage insurance deduction: Borrowers who have AGI up to $100,000 may be able to treat qualified mortgage insurance as home mortgage interest. In this case, 100% of 2011 premiums may be deductible. However, it should be noted here that the insurance contract had to be issued after 2006 and deductions are phased out in 10% increments for homeowners with AGI's of $100,001 and $109,000.
Classroom deduction for teachers: K-12 educators working for around 900 hours during the school year may claim classroom deductions up to $250 and $500 if married filing joint and both spouses are educators. A tax adviser can help you better in claiming the deductions.
Tuition and fee deductions: Every family can deduct up to $4,000 of college tuition and fees in 2012, subject to income limitations.
Student loan interest deduction: The $2,500 maximum deduction for interest paid on student loans begins to phase out for a married taxpayers filing a joint returns at $125,000 and phases out completely at $155,000. In case of single taxpayers, the phase out range remains at the 2011 levels.
Tax credits:
Some of tax credit that you should consider while tax preparation may include the following:
The child and dependent care credit: You can take advantage of this tax credit if you’re paying someone to take care of a dependent who is under the age of 13 years so that you’re able to search for a job.
The child tax credit: This is a tax credit up to $1000 which can be claimed for each qualifying child under the age of 17 at the end of 2012. But this tax credit is not applicable for married couples who earn more than $110,000 and single filers who earn more than $75,000.
The retirement savings and contributions credit: This tax credit is mainly developed to help low and moderate income workers to save for retirement. Single filers with an income up to $28,750, married couples filing jointly with an income up to $57,500 and head of households with $43,125 income may claim this credit.
The earned income tax credit: This is also a refundable tax credit for low and moderate income families. For 2012, the income limit for the EITC is under $50,270 for joint filers and under $45,060 for singles and the maximum credit is $5,891.
The adoption tax credit: This is a non-refundable tax credit, with a maximum amount of $12,650 per child from $13,360 in 2011. The income limit on the adoption credit is based on your modified adjusted gross income ($189,710 - $229,710 – MAGI limit).
Energy and appliance tax credit: If you made any energy-efficiency improvements to your home in 2012, you may be eligible for a tax credit of 10% for the cost, up to a maximum of $500. Improvements for which you can claim credit include new windows, insulation, high efficiency furnaces, water heaters and air conditioning, etc.
The American opportunity tax credit: For tax year 2012, students can claim a $2,500 "higher education tax credit" for the first four years of college.
Lifetime learning credit: The modified adjusted gross income threshold at which the lifetime learning credit begins phasing out is at $104,000 for joint filers, and $52,000 for singles and heads of household.
Medical expenses: This is difficult to claim, because the bar is so high to qualify. You will be able to deduct the portion of your 2012 medical expenses only if it exceeds 7.5% of your AGI.
Mileage: Deducting miles driven for work or other purposes can be a huge tax break and save you a lump sum amount of money. The 2012 rate for business use of your car remains 55.5 cents a mile; medical and moving is 23 cents per mile; and charitable use is 14 cents per mile
Hope the above mentioned deductions and credit will help you while you prepare your taxes!