Personal tax tips for tax preparation & income tax planning

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This page last updated on
December 14, 2004

Personal Tax Preparation & Income Tax Planning Tips from Brookwood Tax Service -- Winter 2005 Archive Articles (NOTE: The tax information in the following articles was current as of the date on the page. Tax law may have changed since these articles were posted.)

A Roth IRA or a Traditional IRA
Tax Tips on Which is Better for You?

For younger taxpayers, taxpayers who expect to be in the same tax bracket after retirement or taxpayers who cannot make deductible contributions to a regular IRA, the Roth is clearly the better choice.
See the Full Article for details.

Do You Have an IRA and a 401(k)?

Your Deduction for IRA Contributions May be Limited

Taxpayers who are covered by an employer's qualified retirement plan face limitations on the amount of deductible contributions they can make to their IRA's.

Full Article

How Fast Can I Get My Refund?

E-File and Direct Deposit are the Fastest

The speed with which you receive your refund depends upon whether you file your return on paper or electronically, and whether or not you choose direct deposit to receive the refund.

Full Article

Tax Tip if You Need Cash, Maybe for College Tuition?
A Loan From Your Employer's Retirement Plan May Be an Option

Check the rules in your employer's retirement plan documents. Federal law allows loans of up to half the plan balance or $50,000 (whichever is less), and loans generally must be repaid within 5 years.

Full Article

If You Had to Sell Your Home Less Than 2 Years After Purchase,
You May Qualify for a Reduced Section 121 Gain Exclusion

The IRS has clarified the rules regarding home sales because of "unforeseen circumstances," which may allow sellers to avoid paying tax on part of their capital gains.

Full Article

Did You Work for Two or More Employers Last Year?
Tax Tip on Claiming a Refund of Excess FICA Withholding
Taxpayers who had multiple employers in 2004 and who earned more than $87,900 may have had more than the maximum amount of FICA (Social Security and Medicare) tax withheld. You can claim a refund on your tax return.

Full Article

Environmentally Conscious Car Buyers Get a Tax Break

Certain Hybrid and Electric Powered Vehicles Qualify

Buy a hybrid powered vehicle such at the Toyota Prius or Honda Insight and take a first-year deduction of up to $2,000. Buy an all-electric car and take up to a $4,000 deduction.

Full Article

Additional Alimony Deductions for Divorced Taxpayers
Payments on Behalf of Former Spouse May be Deductible

A divorced taxpayer who makes payments to third parties on behalf of a former spouse (such as home mortgage payments or medical expenses) may be able to deduct those payments as alimony.

Full Article

Tax Benefits for College Students and Their Parents
Scholarships and Fellowships May be Tax-Free

Qualified scholarships and fellowships are income tax-free under certain conditions.
Full Article

More Tax Breaks for College Students & Their Parents

The Tuition and Fees Deduction Increased in 2004
The tuition and fees deduction maximum increased to $4,000 for 2004 and subsequent years. Money spent for tuition and course-related fees qualifies for the deduction.
Full Article

Tax Benefits for Members of the Military

The Military Family Tax Relief Act of 2003 has various benefits related to military service. Several earlier tax law provisions gave breaks to those serving in combat areas.
Tax Information for Members of the U.S. Armed Forces has links to these details and more.

My Stock Tanked - Can I Write Off the Loss?

A loss on a capital asset can offset a taxable capital gain, and can be used to offset up to $3,000 of other income each year. If your loss exceeds $3,000 in any year, you are allowed to carry it forward to future years and use $3,000 each year to offset other income until the full amount of your loss is used up.


	Child Tax Credit Remains at $1,000 The child tax credit for 2004 is $1,000. Each child under the age of 17 whom you can claim as a dependent will save you $1,000 in tax dollars.


	Keep Your Annual Mutual Fund Statements! If the mutual fund reinvests the dividends, the records are needed to calculate the cost basis in the mutual fund shares. Reinvested dividends increase your basis and reduce the gain on the sale. If you do not have accurate records, the IRS does not allow the reinvested dividends to be added to basis.


	The Holding Period for Inherited Property is always considered to be long-term regardless of the actual holding period. Thus, all sales of inherited capital gain property are taxed at the applicable long-term capital gain tax rate. The maximum long-term capital gain tax rate is 15% in 2004.


	Educator Expense Deduction Congress extended the tax deduction for educators. Teachers of students in grades K through 12 are allowed an above-the-line deduction of $250 for amounts they spend on classroom supplies.


	Lottery and Prize Winnings are Taxable If you win a prize in a lucky number drawing, television or radio quiz program, lottery, beauty contest, or other event, you must include the fair market value of the prize in your income.


	Adoption Credit Increased in 2004 In 2004, the maximum adoption credit increased to $10,390. The exclusion from income of benefits under an employer's adoption assistance program also increased to $10,390. A taxpayer who adopts a special needs child is considered to have qualified adoption expenses, regardless of whether or not he or she has $10,390 of qualified adoption expenses.


	Georgia Part-Year Taxpayers There are three ways to calculate your Georgia deductions and two ways to calculate state personal exemptions. Tax-saving tip -- make sure your tax preparer knows the options and uses the best one for your tax return!

personal tax tips

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