Tax Tips, Rates and Brackets To Help Maximize Your Return


With year-end just around the corner, it is time for taxpayers to start taking some year-end actions with their finances to get the best outcome on theirtaxes. Thanks to the folks over at Turbo Tax, the leading online tax preparation and submission software, and my own experience here are some of the top tips to ensure you minimize your tax bill or maximize your refund.

1. Sell losing investments – With most investors seeing red across their portfolio’s this year, selling a few loser stocks for a net capital loss is a good way to get a $3,000 (or $1500 for single filers) offset against other sources of gain or income. The one silver lining from all the capital (stock) losses investors have suffered this year, is that they can carry unused capital losses forward for as long as they live. This means you can recoup some of those losses against future capital gains and tax returns. (See more on Capital Gains/Losses tax management)

2. Donate to Charity – Donating clothes, toys, household goods and other items to charity before Dec. 31 may help taxpayers who itemize claim bigger refunds while helping someone else. Using tax return software like Turbo Tax helps taxpayers accurately value donations in accordance with IRS guidelines so there’s no need to guess at an item’s fair market value.

3. Prepay some bills: Taxpayers can prepay a few of their bills due next year in the current year, and get to write them off on this year’s tax return. This includes mortgage payments and predictable medical expenses, like braces for the kids.

4. Maximize your 401k contributions: Increasing contributions to an employer-sponsored retirement plan not only gives taxpayers a boost for the future, it save taxes by lowering their taxable income. And that could help taxpayers take some other deductions based on their taxable income.

5. Second Chance Rebates – Some taxpayers who did not qualify for an economic stimulus payment are getting a second chance. Taxpayers may be eligible for a second-chance rebate if they:

– Filed a 2007 tax return, but didn’t qualify for a rebate, or qualified for less than the full amount due to their income, dependents or filing status.

– Had a financial or other life change in 2008 (got married, had a baby, increased or decreased income) that would qualify them for a rebate

6. Deduct job search expenses: Taxpayers who are unemployed or just looking to change jobs can deduct their job search expenses. The rules, however, require that their job search be in the same line of work they are currently in. Job search expenses can include travel, lodging, phone calls, resume preparation, and career counseling. These can be deducted even if they don’t get a job offer. However, if this is a first job, no job search expenses are deductible.

7. Tax relief for foreclosures: Recent legislation provides tax relief to people with a home loan that was reduced, restructured or foreclosed. Taxpayers that qualify may not have to pay taxes on the amount of debt that was forgiven by their bank.

8. Open or contribute to an IRA: Qualifying taxpayers have until April 15th to open or make contributions to an IRA or retirement account. Making a deductible contribution before the due date may help lower your tax bill.

9. New Home Buyer Credit: If you are buying a home for the first time, you could be eligible for the new homebuyer’s tax credit. See this post – 2010 New Homebuyer Credit Extension – for more on this credit.

TurboTax is Easy, Free Edition, Fast Refund

Key Tax Changes you can benefit from:

[Update: See this post for 2009 vs. 2010 Federal Income Tax Bracket Tables and Standard Deduction Changes]

– Standard Deductions has been raised to $5,700 for singles and $11,400 for joint filers, an increase of $250 and $500 (from 2008) respectively to reflect inflation adjustments. This has also resulted in tax-bracket thresholds increased for each filing status.

– Gift Tax Exemption raised to $13,000 (up $1,000 from 2008)

– Personal and dependency exemption raised to $
3,650, up $150 from 2008.

– 401(k) Contribution Limit raised to $16,500 (up $1,000 from 2008)

– Income Limit for Full Roth IRA Contributions: $105,000 single/$166,000 joint (up $4,000/$7,000 from 2008)

2009 Single Filing Status Tax Brackets:

Taxable Income Bracket

Tax Payable on Income

$0 and $8,350


$8,350 and $33,950

15%; plus $835

$33,951 and $82,250

25%; plus $4,675

$82,251 and $171,550

28%; plus $16,750

$171,551 and $372,950

33%; plus $41,754

Over $372,951

35%; plus $108,216

2009 Married Filing Jointly Status Tax Brackets

Taxable Income Bracket

Tax Payable on Income

$0 and $16,700


$16,700 and $67,900

15%; plus $1,670

$67,901 and $137,050

25%; plus $9,350

$137,051 and $208,850

28%; plus $$26,637

$208,850 and $372,950

33%; plus $46,741

Over $372,950

35%; plus $100,894


Related Posts:
~ Taxes on the Economic Stimulus Credits and Payments
~ Taxes and my Paycheck
~ The A to Z of good personal finance (Part 1)
~ How to Get a Free Copy of your IRS Tax Return
~ New 401k Contribution Limits for 2010

Leave a Reply

7 Comments on "Tax Tips, Rates and Brackets To Help Maximize Your Return"

[…] behind us it is time to start looking ahead to 2011 and 2012, and think about implementing some smart tax management strategies. 2011 tax rates stayed the same as 2010 levels thanks to the extension of the […]

[…] earlier in the year I could have avoided or significantly reduced my tax bill. These tax reduction strategies are simple, possibly good investments and ones that you can put in place today. I know I […]

[…] For Year-end tax advice and potential savings see Tax Tips, Rates and Brackets for 2009 Returns […]

[…] announced recently. With low inflation and a slow economy, there are only marginal changes from the 2009 tax brackets. Consumer Price Index (CPI) data released by the Bureau of Labor Statistics (BLS), used by the IRS […]

[…] up to $3,000 of net loss can be deducted against other kinds of income (US only). Part of your tax planning strategy should involve reducing your capital gains exposure by assessing and selling the under performing […]

[…] Tax Posts: – Tax Tips, Rates and Brackets for 2009 Returns – Real Tax deductions that may surprise […]

Bill Gaskin
Monday 12:18 pm

This is one of the best how to maximize tax return article I have come across. Very useful and relevant information, if more of us did this we would get more at the end of the year.


Previous post:

Next post:

Disclaimer: The information contained on Saving to Invest (this site) is for general information purposes only and does not constitute factual or professional financial advice. In accordance with FTC guidelines, we disclose that we may have a financial relationship with some of the merchants/companies mentioned on this website. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers. Refer to the Privacy Policy and Terms of Use for more information