Tax Relief and Health Care Act of 2006

6 02 2007

Tax time is almost here – and although most people look forward to their annual visit to their tax professional about as much as a dental exam, this year just might bring a few pleasant surprises. On December 20, President Bush signed the Tax Relief and Health Care Act of 2006. And some of the new changes just might help you.

You now have an option to deduct either state and local INCOME taxes – or state and local SALES taxes, whichever is larger. If you saved all your receipts throughout the year, you can add up the total amount of sales taxes you paid and claim that amount. But let’s be realistic…very few of us actually save all our receipts – so instead, you can take the easy road, and simply click on this link: Sales Tax Deduction Calculator.

If you, your spouse, or your children attend any level of college in 2006 or 2007, a hefty deduction of up to $4,000 may apply! This deduction can only be used if it provides more benefit than the Hope or Lifetime Learning Credits, which take into account your college expenses and your Adjusted Gross Income. But it applies even if you are using student loans to pay for your tuition. Definitely worth a closer look – and for more information on what you might qualify for, hit this link: Hope or Lifetime Learning Credit Info

Many teachers pay for classroom supplies from their own personal funds – but can now deduct $250 of the expense. And better yet, if the expenses exceed the $250 amount, there can be other benefits available by itemizing the supply deductions. Link here to learn more: Educator Expense Adjustment. If you aren’t a teacher yourself – being aware of how much is paid out of pocket by teachers – it may be a nice idea to ask your local school or your child’s teacher if they need any supplies donated to their classrooms.

If you feel any of the above items might apply to you, be sure to gather the additional documentation, and take the time to ask your accountant if you can benefit from these specific changes. And if you need the referral of a qualified tax professional, I’d be happy to provide a contact. Asking just a few simple questions could give you a well-deserved break!


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