Welcome to today’s live chat about how to cut your tax bill!
Happy to be here! Let's get going.
Joining us today is Kiplinger’s tax expert Sandra Block. Thanks for being here, Sandra!
To get started, can you tell us if there are any new tax breaks for 2012 folks should know about?
Not anything really new, but a few tax breaks that had expired were resurrected in the fiscal cliff bill. Those include a $500 credit for home-energy improvements and a deduction for state sales taxes. If you live in a state that doesn't have an income tax (because you can't deduct both) this is a particularly useful tax break for you.
Ready for your first question?
Our first one is from deployedairman
Sorry to hear that. I hate to punt on this, but I think you're going to need to talk with a tax preparer, preferably an enrolled agent or CPA. There are several factors that will affect whether you can deduct this tax bill, and when.
Thanks, Sandra. Here's our next question from Robert
No, it's too late to lower your 2012 tax bill by contributing to a 401k (although contributions will lower your 2013 tax bill). However, if you're eligible for a deductible IRA, you have until April 15 to make a contribution, and that could lower your 2012 tax bill. Since you're covered by a retirement plan at work, you must meet income eligibility requirements for a deductible IRA. Here's an article I wrote with more details:
Thanks, Sandra. Great tip.
We'll go ahead and take our next question from Barbara
There could be a lot of reasons. Did you change your withholding? Lose a dependent? Give less to charity? Reduce the amount you contribute to your 401k? Income is just one factor that affects your tax bill.
Thanks, Sandra. All good questions for Barbara to consider. She submitted her question early, but we'll see if she has a follow-up.
In the mean time, here is our next question from Ram
I'm not aware of anything that provides those averages, although CCH does compile average deductions for some common categories.
Thanks, Sandra. A good starting point.
When you're ready, here is our next one from D. Schofield
As for deductions on investment expenses, IRS Publication 550 has details.
Great. Good advice. Thanks, Sandra.
Here is our next one from wsjnyc
Here is our next question from "guest"
Sorry, Sandra. No rush. Thanks for the followup
I can't find one right now but most tax software programs will show you how deductible IRA contributions will lower your tax bill.
Thanks, Sandra. If you're ready, here is our next question from Chynna
I don't think so.The credits and deductions for higher education costs are limited to tuition and fees once you start school. But you're going to be piling up a lot of bills en route to your MD, don't overlook the many educational tax breaks available to you.
Looks like we have time for just a couple more questions.
I'm not familiar with North Carolina's state credit but am inclined to say no.
Alright, let's go ahead and take our last question from Bob
Alright, unfortunately we are out of time for today’s chat.
Thanks for all the great questions, and a special thanks to you Sandy for sharing your time and expertise.
And be sure to follow Sandra on Twitter at @SandyBlock.
Thanks to all who participated!
If you've been putting off the onerous task of finishing your tax return, you've come to the right place. Kiplinger's tax expert Sandra Block will take your tax filing questions on Thursday, February 28, from 2pm to 3pm EST. Join us then to make sure you claim all of the deductions, credits and tax breaks you deserve.
