Tips for saving on taxes

February 18, 2011 4:35:19 AM PST
Like it or not, it's time to start thinking about filing your 2010 income taxes. The good news is that you can save some money on your taxes, thanks to some of the changes in the tax law passed at the end of last year.

If you work, you should've already noticed a bit more money in your paycheck, thanks to the 2% tax cut that was part of the Tax Relief Act of 2010.

"The tax reform bill that got passed late last year had some really good news in it," explains Kathy Pickering, Executive Director and Vice President of the Tax Institute at H & R Block.

"The first thing is that taxes did not get increased, for all Americans, at all levels, which is great news for everyone. Additionally, those of us that work, are getting a 2% raise.So, for example, if you make $50,000 a year, you can get an extra $1000 in your paycheck and you don't have to do anything to get that. That just comes automatically in you paycheck."

Pickering suggests using that extra money to pay off bills or to contribute to your retirement account.

Also, if you've been unemployed, you will have to pay taxes on you unemployment compensation from 2010, but you can cut the amount you have to pay by taking advantage of deductions for job-hunting expenses.

"If you have to travel to go on interviews, those might be some things that you can take advantage of. to reduce your tax liability," Pickering explains.

You can also take advantage of tax deductions if you made home improvements to make your house more energy efficient, if you're helping to support elderly parents, or if you have one or more kids in college.

And did you send money to the earthquake victims in Haiti or make other charitable donations? Itemize them and that's another way you can cut what you owe Uncle Sam.

And perhaps the best news about taxes this year is that they're NOT due April 15th, because it's a holiday in Washington, DC.

"The IRS is closed and that means that the deadline has been moved to Monday, April 18th," Pickering says


That may not save you money, but it may save you seom stress.

For more H & R Block tips on saving on your taxes, click here.