If you're like many Nevadans, you're still working to file your taxes. Whether you pay a professional, use AARP Tax Aide's free tax preparation service or file them yourself; understanding some key elements of the tax code can help save you money. The clock is ticking, so we've provided five tips to tax savings as April 15 approaches.
Check to see if you're eligible for mortgage debt forgiveness.
If your mortgage debt for a primary residence was partially or fully forgiven during tax years 2007-2011, you might be able to use special tax relief. Mortgage debt forgiveness applies only in certain circumstances, so be sure to check to see if you qualify. You can call the IRS to inquire at 1-800-829-1040.
Understand the impact of a change in job or income status.
If you started receiving benefits from Social Security or a pension, or took an early distribution from your retirement account, your tax liability might be different than in previous years. Look for form SSA-1099 from the Social Security Administration or form 1099-R from your IRA custodian or retirement plan administrator. Also be sure to check any tax issues related to a job change or loss at www.aarp.org/work.
Gift money to loved ones equals a tax exemption for you.
There is now a higher gift exemption. You can give any individual up to $13,000 without owing any gift tax. Many use the gift exemption as a way to transfer smaller amounts of money to their heirs without probate taxes.
Retirement account savings can mean tax deductions.
Don't forget - you might be eligible to make up to $6,000 in tax-deductible contributions to an IRA up until April 15 for tax year, dependent on your income, filing status and access to a retirement plan at work.
Also, check to see if you're eligible for the saver's credit. You may be eligible for this tax credit if you make eligible contributions to an employer-sponsored retirement plan or an IRA, depending on your income level. The saver's credit applies to those earning up to $55,500 a year ($27,750 for single filers).
Did you spend a lot of time at the doctor or dentist?
If this was a difficult year health wise for your family; you might be able to deduct medical and dental expenses. If you itemize your deductions and those expenses are higher than 7.5 percent of your adjusted gross income you can write down those costs. You may be able to include prevention and treatment expenses, as well as transportation costs essential to your care.
For more tips about taxes and other financial issues, visit www.aarp.org/money. Information on AARP Tax-Aide can be found at www.aarp.org/taxaide or by calling 1-888-227-7669.
