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February is filled with hearts, flowers, frogs & tax moves

What do hearts and flowers, leaping amphibians and taxes have in common? February!

Leap-year-calendar-february-29

The shortest month of the year is upon us. In 2016, however, it's a day longer because it's Leap Year, hence the frog allusion, adding a 29th day to our calendars.

Then, of course, there's Feb. 14, Valentine's Day.

And February also is a traditionally busy time for taxes.

This is the month that most of us finally get all the tax statements we need to file our returns. And folks who filed early are anxiously awaiting their refunds.

Whether you're working on your 2015 taxes or already looking ahead to the 2016 task, there are some moves you can make this month to lower what you owe Uncle Sam.

Be a weather watcher: Punxsutawney Phil and other sleepy marmots roused from their dens on Groundhog's Day will let us know whether we're in for warmer temps or six more weeks of winter. Either way, it's a good reminder to look at your home's energy efficiency.

The extenders tax bill that became law at the end of last year kept the tax breaks for relatively easy energy upgrades like new windows or added insulation in the tax code for both 2015 and 2016. If you made any qualifying home improvements last year, they could be worth a tax saving of up to $500. Or if you want to take care of residential upgrades this year, they'll count on your 2016 taxes.

Internal Revenue Service Form 5695 and its instructions, as well as the Energy Star website and this post from the ol' blog have more details.

Keep track of your bets: The biggest betting day of the year is Sunday, Feb. 7. Yep, I'm talking about the Super Bowl, which will mark its 50th anniversary this year. The battle for the NFL championship should be a classic between age and experience, Peyton Manning and his Denver Broncos, and youth and enthusiasm, Cam Newton and his Carolina Panthers.

And gamblers worldwide will be dropping trillions of dollars on the game and all the crazy and often very loosely associated prop bets. Regardless of how much you win, it will count as taxable income on your 2016 taxes. Hang onto to losing betting slips, too. You can use them to lower that taxable winning amount.

Shopping for tax breaks: Will you be hitting the Presidents Day sales this Feb. 15? If you live in a state that has no income tax, like my native Texas, the sales tax you pay on your purchases can count as an itemized deduction on your taxes next year.

It's also an option on the 2015 return you're working on now. In fact, this tax break which used to periodically expire as part of the extenders tax package now is a permanent part of the Internal Revenue Code.

And don't worry if you didn't hang onto last year's sales receipts to tally your tax break amount. The IRS provides tables for every state with an average amount of sales taxes you can claim on your Schedule A. Even if you do live in one of the 43 states that does collect an income tax, it's worth checking into whether it would be better to claim your sales tax amount instead, especially if your state's tax rate is low.

February_tax_moves_160Well, since February, even when an extra day is added, is short, I'm going to limit this post, too. But you always can find more February Tax Moves to make over in the ol' blog's right column.

They're listed until a heading with that same title, right under the countdown clock that's keeping track of how long until we reach the April 18 (yes, it's later this year) filing deadline.

Enjoy the month's holidays, special events and tax savings!

Comments

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Kay

V., you have to choose one deduction method; you can't mix the two. If you go with the standard amount, that's it. You can't then add any Schedule A items to your deduction claim. Similarly, if you itemize, then the amount on Schedule A is all you can claim. Kay

V.LYNN

QUESTIONS:
Can the 10% Medical Bills AGI limit deductions and Home Mortgage Premiums/Interest should be add as a separate deduction claims after the Standard Deduction?

Or should I itemized both and compare which one has more deductions?

In my scenario; the standard deduction gives more amount filing married/joint, versus itemizing, but then again, I'm back to this questions: Can I add this 2 items separate such as;
Medical bills
Mortgage Premiums/Interest
Or anything else, that can be added separately on top of the Standard Deduction to reduced more of my annual taxable income within 65-70K.

Thank you, appreciate your prompt reply.

V. LYNN of SATX

Kay

Did you buy the car for your dependent or did he/she make the purchase? If the dependent paid for the car, then I wouldn't claim it. Tax pros, thoughts?

Julie Young

Question, if one of my 2015 claimed dependents purchased a car in 2015 can I deduct the sales tax paid on my schedule A deductions?

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