College memories, college costs
Spending on yourself

A tax-saving stocking stuffer

I’m baaacccckkk!

Well, I thought I was just being lazy Friday by not blogging early in the day. So when I finally went to post some thoughts around midafternoon, I discovered that it was a greater, more-encompassing power that didn’t want me sharing: My blog host had crashed.

Stockingshung So what did I do with my blog-free time? Well, I finished up Christmas decorating. We have a fireplace and that means, much to my holiday decorating delight, a mantel! For the last six years our stockings were hung with the greatest of care from the bar/countertop that separated the kitchen and den in our Florida home. It’s sure nice to see those socks perched properly atop a Christmas tchotchke-covered mantelpiece.

But this year’s piece de decoration resistance: Taping bows to the boxes still stacked in the dining room waiting to be unpacked!

I also spent some time doing my actual, earn-a-paycheck job of writing about taxes, specifically updating existing and creating new stat pages (
deduction and exemption amounts, retirement account contribution limits, etc.) for Bankrate’s tax channel. The new information isn’t up on that site yet, but here’s a preview.

You always have the choice when you file your taxes of claiming the standard deduction amount or itemizing. To get the most tax savings, you should pick the one that gives you the larger deduction amount. The standard amounts for 2005 returns are $5,000 for single filers, $7,300 for head of household taxpayers and $10,000 for married couples filing a joint return.

Those are pretty hefty numbers, but you want to make sure that you’re not cheating yourself by taking the easy standard deduction route. That was the case several years ago when a government study found taxpayers who used the standard deduction instead of itemizing paid the IRS almost $1 billion more than they should have. Since most people today still claim the standard deduction rather than itemize, it’s a good bet that some of them are overpaying now.

Don’t you be one of those taxpayers handing over too much to Uncle Sam. See if you can come up with enough itemized expenses, such as other taxes you paid, medical expenses or gifts to charity, to exceed your standard amount. If you’re close, miscellaneous deductions might help you over the top, especially if you can bunch such expenses. This story explains this technique.

The point is, if you can reach a larger deduction amount by filling out Schedule A, then do it. Sure, it will cost you some time when you file, but it could save you money.

Finally, back to the broken blog. I’m not sure when the site went down Friday, but I did post relatively late the day before so you might not have had a chance to see that entry. It deals with my alma mater Texas Tech, getting to know other Techsans here in Austin and some tax breaks that can help you pay for higher education. If any of that interests you, please just keep scrolling and there it is -- finally!

Comments

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Kay Bell

Thanks, Jonathan. That's a good idea and it is now on my "to-blog" list. The good thing about standard deductions going up is filers who don't itemize get a bigger deduction amount. But if you do have some things to itemize, it's frustrating thinking you lose their tax value because you don't have quite enough to supplant the standard amount. There are some ways to try to get that Schedule A amount over the standard deduction and for you and other DMWT reasders in your situation, I'll look at them in a future post.

Jonathan

Yeah, all of Typepad crashed for a while.

This is a good tip, perhaps you can make a checklist or something of deductions we should go over to see if we can break $10k? I just don't see us doing it (no mortgage), but who knows? =)

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