Wednesday , November 11, 2009

In this week's money matters we have some tips for you to help prepare for tax day.

Here are some things to watch for:

1. Unemployment benefits: Yes, these are subject to income tax. But, this year there is an exemption of $2,400 per individual. You may want to estimate and pay quarterly taxes so you don't get hit with all of the taxes at once. Or, you can have 10% of benefits withheld by the payer, which should cover most people.

2. New car purchases: Taxpayers who buy a new car before January 1st of 2010 may deduct sales and excise taxes on fees on as much as $49,500 of the purchase price. However, it phases out for those with incomes over $125,000.

3. Charitable gifts: this will be the last year for taxpayers over 70.5 years old to make a charitable contribution directly from an IRA. Unless congress acts, a future donation would have to be withdrawn from the IRA, claimed as income and then deducted as a donation.

4. Take losses: If you got hammered with long term capital losses on investments held longer than one year, then you may deduct up to $3,000 of these losses per year against ordinary income with the excess carried forward for use in future years.

Check with a tax professional about your individual situation before acting on any of these tips.