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Weekly Tax Tips for 2010

Tax_tip_icon_pencil_point2 As much as we'd like for it to be so, our tax responsibilities don't end on April 15.

As soon as we've filed our prior year's 1040, it's time to start thinking about how to minimize what we might owe the IRS for this current tax year.

Just as our tax tip a day during filing season helped get you to the April deadline, these Weekly Tax Tips will help you with your tax tasks the rest of the year.

You can find the week's featured tip in the upper right corner of the ol' blog through Dec. 31. Or you can check out our running list, updated each week, below.

  1. Time for tax record keeping-- Your 2009 Form 1040 is safely in the IRS hands, but what if a tax auditor has some questions? Be prepared to put the examiner's mind at ease by whipping out the documentation that you have right at your fingertips thanks to your good record keeping system. (Week of April 19, 2010)
  2. Where's your refund?-- Still waiting on money back from the IRS or your state tax department? Uncle Sam, as well as many state offices, have online refund tracking tools that tell you just when you can expect your tax cash. (Week of April 26, 2010)
  3. Track your winnings -- Super Saver faced 7-to-1 odds, but ended up winning the 136th Kentucky Derby. All those bettors who backed the horse (and jockey Calvin Borel) also won, as did the IRS. Remember, gambling winnings are taxable income. And don't forget about what your luck means you'll also owe your state tax collector. (Week of May 3, 2010)
  4. Appealing your property tax appraisal -- Your annual real estate tax bill is based on the value of your home. And a local appraiser comes up with that amount. If you think your home's value is incorrect, you can contest the appraisal. There are lots of companies that offer to help you out for, of course, a price. But you can make your arguments yourself before the appraisal appeals board. . (Week of May 10, 2010)
  5. Surviving an audit -- For most individual filers, the risk of audit remains relatively low. Still, statistics are of little comfort if your return is among the few fingered for a closer look. But if worse comes to worst, don't panic. There are some steps you can take to help you, and your bank account, survive the experience. (Week of May 17, 2010)
  6. Preparing for disasters -- Springtime is thunderstorm time, with threats of flooding rain and tornadoes. Summer is hurricane season. Winter's ice and snow storms can produce extreme damages. Whatever the season, have a financial disaster kit ready. And remember that the tax code provides some help in catastrophic times. (Week of May 24, 2010)
  7. Teen jobs and taxes -- If your teenager will be working this summer, the young employee (and you parents!) need to be aware of possible tax implications. Issues such as being a dependent, the amount of money a youth earns and how the teenage worker makes the income (as wages or via self-employment) all come into play. (Week of May 31, 2010)
  8. Calculating your estimated taxes -- If you file Form 1040ES vouchers, your second payment of the tax year is due June 15. If you have income that's not subject to payroll withholding, making these four extra payments a year will help you avoid penalties an interest for late and underpayment of taxes. (Week of June 7, 2010)
  9. Consider going electronic -- A report from the IRS watchdog agency chastised the IRS for not cashing tax payment checks more quickly. The agency acknowledged it could be more prompt in depositing paper payments and is developing "an action plan to improve timeliness of payments." The bottom line is that check float times will be reduced, meaning taxpayers better be able to cover checks as soon as they're sent to the tax collector. Better still, look into electronic payment options, such as the Electronic Federal Tax Payment System (EFTPS). (Week of June 14, 2010)
  10. Adjust your withholding -- Too many or too few exemptions on your W4 mean you're over- or underpaying the IRS via your payroll taxes. Neither is good. Have too little withheld from your pay and you could owe a big tax bill when you file. Too much withholding means you've been giving Uncle Sam free use of your cash all year long. Remedy the situation by periodically reviewing your payroll withholding and adjusting it as needed. The IRS even has an online calculator to help you figure out the correct number of exemptions to claim. (Week of June 21, 2010)
  11. Get credit for day camp costs -- If you send your kiddos to a day camp during the summer while you work, then that cost can be counted toward the child and dependent care tax credit. Depending on your income and the number of youngsters at camp, the credit could knock up to $2,100 from your tax bill. (Week of June 28, 2010)
  12. Get charitable early -- Most of us wait until the end of the year to give to our favorite charities. We don't have to. Nonprofits will take our donations year round. That's especially true in the summer, when many groups engage in projects to help folks make it through the hottest time of the year by providing fans for folks without adequate cooling or opening the organization's doors longer so more people can get out of the hot sun. A gift now would be very welcome, and possible tax deductible! (Week of July 5, 2010)
  13. Look out for taxes on vacation -- You might take some time off this summer, but chances are the taxman won't. In fact, lots of taxes target travelers, such as added hotel levies, extra charges on rental cars and more fees on food. So when you budget for your holiday, be sure to add a few dollars to the mix to take care of travel-related taxes.
  14. Report your tips -- If you work in an industry where tipping is typical, remember to keep track of your gratuities. That extra money is taxable income. In many cases, once your monthly tips exceed $20 you must report your tips to your employer. It's tempting to ignore tips when it comes to taxes, but be forewarned: The IRS knows it's missing out on some money here and is looking more closely at returns from individuals with jobs where tipping is standard. (Week of July 19, 2010)
  15. Take advantage of sales tax holidays -- Classrooms are about to re-open and that means it's time for annual state sales tax holidays. This year there are 16 such events. If your state is one offering tax-free purchases of certain items, check out what you can -- and can't! -- buy during the tax holiday. Then make your list and stick to it! (Week of July 26, 2010)
  16. Contribute to your retirement accounts -- There's been lots of attention this summer to public pensions, but most of us will pay for our retirement ourselves. That means we should be contributing to our 401(k) and IRA plans. Sure, you have until next April 15 to put money in an IRA, but you don't have to wait; when you have some extra cash, stash it in your account. As for your workplace plan, if you neglected this benefit option, open one as soon as you can. And if you have a 401(k), consider upping your payroll deduction amount. (Week of Aug. 2, 2010)
  17. Think about getting tax help -- Yes, April 15 seems a long way off, but to make sure you get the best tax advice, you need to start thinking about the tax pro you want to hire well before the filing deadline. A good adviser can suggest things to do now to lower your tax bill. The key is to make sure you get the tax pro who fits your tax needs and one you check out thoroughly. (Week of Aug. 9, 2010)
  18. Gas taxes higher in some states -- Did you take a driving vacation this summer? Depending on your route, you might have paid more when you stopped along the way to refill your gas tank. Although pump prices this summer actually went down in most places, gas taxes have gone up in Kentucky, Minnesota, Nebraska and North Dakota, as well as the District of Columbia. This is one of those sneaky taxes, so if you're planning a road trip you might want to budget a bit extra for fuel just in case you drive through a high gas tax state. It's almost enough to get you thinking about a more fuel-efficient car that offers a tax break, too. (Week of Aug. 16, 2010)
  19. Divorce and taxes -- Tiger Woods, the world's most famous professional golfer, saw his marriage officially end in August. But bad marriages aren't restricted to the rich and famous. If you're having marital problems, don't forget to consider the tax implications of divorce. Taxes might not seem important amidst all the other issues your working through, but some planning before your decree is final could make a big difference on future tax bills. (Week of Aug. 23, 2010)
  20. Hobby or business? -- Are you operating a business or just working on a project for fun? You need to decide. If you don't, a taxing jurisdiction could make a costly choice for you; check out Philadelphia's blogger tax. In some situations, at least on the federal tax level, it's worth it to turn your hobby into a full-fledged business. (Week of Aug. 30, 2010)
  21. Take advantage of tax amnesties -- If you owe back state taxes and live in Washington, D.C., Florida, Nevada, New Mexico, Kansas or Maine you're in luck. Those locales are offering tax amnesties this month (and, for a few, beyond), where folks can pay what they owe and generally get a break on associated penalties and interest. If you don't live in one of these places, you still might be in tax luck. Illinois' tax amnesty begins Oct. 1 and many tax offices have year-round voluntary tax compliance programs that offer some sort of payment deal to taxpayers in order to get their hands on back tax money. Check with your state tax officials for details. (Week of Sept. 6, 2010)
  22. Plan for expiring tax cuts -- Congress returned to Washington this week with the expiring Bush-era tax cuts atop members' to-do lists. If the House and Senate don't take any action, the 2001 and 2003 tax cuts will be history on Jan. 1, 2011. Most tax watchers don't expect that to happen. But then we didn't think Capitol Hill would let the estate tax die, either. So just in case, here are some tax moves you can consider just in case the tax laws as we know know them go away. (Week of Sept. 13, 2010)
  23. Contesting your property tax assessment -- One of the most unpopular taxes around is the levy on real estate. Every year homeowners across the country dread getting their assessment notices and subsequent tax bills. But you don't have to simply accept a property tax bill that you know is wrong. Check with your local tax assessor-collector's office about the process and deadlines, gather your data and then argue for a more equitable tax bill. Chances are you'll get it! (Week of Sept. 20, 2010)
  24. Tax breaks for higher education -- Now that your kids are back in school, you've probably been thinking about how you'll pay their higher education expenses, either this tax year or in future ones. The good news is that the tax code offers some help to pay for school. This tax year we have the American Opportunity Tax Credit (which is likely to be extended beyond 2010), the Lifetime Learning credit, student loans and their tax-deductible interest, savings bonds and tax-free 529 plans. For kids still at home, heading off to classes in kindergarten through grade 12, you can tap Coverdell Education Savings Account money for some expenses. And don't forget about your state; some, such as Iowa and Louisiana, also offer education-related tax breaks. (Week of Sept. 27, 2010)
  25. Tax credit for energy-efficient home improvements -- Winter is on its way. Get your house ready by making energy-efficient improvements, such as new storm windows or added insulation. These relatively simple upgrades will not only keep you cozy when temperatures drop, but also could help you claim a $1,500 tax credit. And don't forget about possible help from your state. Virginia just completed a sales tax holiday that offered tax breaks on energy- and water-saving products. West Virginia's Energy Star Sales Tax Holiday continues through Nov. 30. And North Carolina will conduct a similar energy-efficient appliances tax holiday on Nov. 5-7. Also check out the Database of State Incentives for Renewables and Efficiency, or DSIRE, which provides a comprehensive list of state-subsidized energy improvement projects. (Week of Oct. 4, 2010)
  26. Reduce your taxable estate -- If you plan on living beyond the end of the year, your estate, especially if it's a sizable one, is likely to face an estate tax levy. You can start whittling down what the IRS will eventually get by making  estate plans now. An easy move, and one welcome by your heirs while you're still around so they can say thank you in person, is giving away some of your assets. You can give $13,000 increments to anyone without triggering the federal gift tax. (Week of Oct. 11, 2010)
  27. Sell appreciated assets -- The tax rate on capital gains and qualified dividends is likely to be higher in 2011. So evaluate your portfolio now to see if you can take advantage of the historically low 2010 rates, 15 percent for most investors and zero taxes for those in the 10 percent and 15 percent income tax brackets. I know, I know. You don't like paying taxes any time, but if you see some assets that you can or should sell, do so this year while you can still take advantage of the low investment tax rates still in the tax codes. (Week of Oct. 18, 2010)
  28. Disasters come in all forms -- Hurricane season 2010 is winding down, but some days on a calendar don't mean anything when it comes to property damage. While the weakened tropical system Richard is blasting Mexico and likely to return to the Gulf and possibly head toward Texas, tornadoes have been spinning in the southeast, well past the typical twister season. And don't forget about more run-of-the-mill, but just as costly, casualty losses. These include fires, thefts and burglaries, auto accidents and even, as some homeowners have discovered, defective drywall. In each of these cases, you might be able to claim some of your losses on your tax return. (Week of Oct. 25, 2010)
  29. Make sure your business follows the rules -- Starting a business is the dream of millions. But to ensure your success, you need to follow all federal and state tax laws. Some of the tax provisions can provide benefits. Others, however, can present stumbling blocks if you're not careful. This is a particular concern at the state level. Check with your state's tax office, and your business adviser, to make sure you meet all business tax rules. (Week of Nov. 1, 2010)
  30. Deciding whether, and how much, to give -- Earlier this year, we talked about donating to your favorite charity well before the Dec. 31 tax deduction deadline. Well, since most of you didn't do that then, it's time to think about philanthropy and taxes again. This time, though, you also need to take into account what tax laws might be in effect in 2011. For 2010, wealthier taxpayers might be able to get the most out of their donations since the phase-out of Schedule A claims is gone this tax year. But those same high-income earners also need to consider whether donations would be worth more in 2011 if the Bush tax cuts expire and their income tax rates go up. And don't forget about the alternative minimum tax, or AMT. Many deductions aren't allowed if you're subject to this costly parallel tax. (Week of Nov. 8, 2010)
  31. Spend down your FSA -- A medical flexible spending account, or FSA, is a great way to save on health care costs and taxes. You put aside some pre-tax dollars from each paycheck and then use them to pay for eligible expenses. But if you don't use all your FSA funds by the end of your benefit year, which is Dec. 31 for most companies, you'll lose it. Some companies give you until the following March 15 to spend up the prior year's FSA money. But just in case your workplace doesn't, start spending FSA money now so that you don't waste any. And remember, this is the last year that you can buy over-the-counter (OTC) medications and get them automatically reimbursed from your FSA. Next year, even OTC purchases will have to be prescribed by your doctor in order for your FSA to pay for them. So stock up on FSA-covered aspirin etc. now! (Week of Nov. 15, 2010
  32. Donate appreciated assets -- I'm sure by now you've reviewed your portfolio to see if you have some winning holdings that you should sell and lock in at today's low capital gains tax rates. But maybe there was an asset or two you just didn't feel like paying taxes, regardless of how low, on right now. If you still want to clear out that appreciated stock, consider giving it to your favorite charity. If it's a long-term holding, meaning you owned it for more than a year, you get the assets market value on the day you donate as a tax deduction. Even better, you won't owe any capital gains tax on the property. Best of all, your charity can sell the stock without any tax consequences and use the money for whatever it needs. Everybody wins! (Week of Nov. 22, 2010)
  33. Make your January mortgage payment early -- Looking for an added itemized deduction amount to count on your upcoming tax return? Pay your January mortgage amount this month. The extra mortgage interest can be deducted in the year in which it's paid. And for those of you concerned about why this isn't prepaid interest which, under tax law, can't be deducted in full in the tax year in which it's paid (except for certain loan points), stop worrying. Home loan payments are made at the end of your occupancy period; the 1st of the month payment covers the previous 30 days. So the interest in your Jan. 1 payment actually includes interest for December's loan period, making it eligible to be deducted for this tax year. Making this early payment early in December also will help with record keeping. By paying early, your loan company will be able to get it on the books in plenty of time to be reflected on your annual Form 1098 that shows your house payment tax details. If you send it at the end of the month and it's not shown on your 1098, go ahead and claim the extra interest, but include a statement letting the IRS know why your amount differs from your banker's amounts. (Week of Nov. 29, 2010)
  34. Pay your property taxes early -- If your county is anything like the places we've lived, you got your annual property tax bill weeks ago, but it's not officially due until early next year (our due date is Feb. 1). As with all bills, you can pay early if you like. In the case of property taxes, it might be worthwhile. By paying by Dec. 31, you can deduct the payment on this year's taxes. If you itemize, you can deduct the full payment; just make sure you do so by the end of the year. But if you claim the standard deduction, you're out of luck. Previously (2008 and 2009 tax years), you were allowed to add up to $500 (or $1,000 if you're married and file jointly) of property tax payments to your standard deduction amount. But that tax break was not continued. (Week of Dec. 6, 2010)
  35. Make estate, and estate tax, plans -- The new tax act worked out by President Obama and Republicans finally made it into law. Part of the package was a two-year extension of the estate tax. Most of use won't have to worry about our estate owing Uncle Sam when we pass away; there's usually an exemption for smaller estates to protect them from owing. For 2011 and 2012, only estates worth more than $5 million will owe the 35 percent estate tax. But you might have more than you realize. And regardless of how rich or not rich you are, it's always better to have at least a basic estate plan (e.g., a will, power of attorney decisions, etc.) in place. That way, your assets get distributed the way you want, not the way a judge decides. (Week of Dec. 13, 2010)
  36. Adjust your payroll withholding -- Yes, this was a tax move suggested month ago (see #10). It's actually something you need to think about year round. Changes in your life -- a home purchase, a new addition to your family, a new job -- affect your tax liability. Even if your life is the same, if you got a big refund earlier this year than you know you can do some tweaking to get that money in your hand throughout the year by filing a new W-4. The goal is to have your withholding so that only enough comes out of your pay to get you closest to your eventual tax bill. (Week of Dec. 20, 2010)
  37. Make year-end money and tax moves -- You have just a few days to make some moves that could put cut your 2010 tax bill. Pay your January mortgage early to get the extra interest deduction. Similarly, pay your real estate taxes early so that amount can go on your Schedule A, too. And don't forget your favorite charity. To deduct donations, the gifts must be made by Dec. 31. -- (Week of Dec. 27, 2010)

If you got an extension to file your 2009 return, or just want a refresher on more ways to save on taxes, don't worry. The previously-posted daily doses of tax wisdom, courtesy of me via Bankrate's annual tax guide, are still here on the ol' blog at, where else, Daily Tax Tips for 2010.