12 Tips to Remember as Tax Deadline Approaches

Taxes are due on April 15. (Photo: Thinkstock)
Taxes are due on April 15.
(Photo: Thinkstock)

Just days to go until the April 15 deadline, and we’re rolling out 12 lucky tax tips for 2013 returns. Some might save you a little money; some might save a few headaches.

1. The rules haven’t changed, but there is a new simplified method for 2013 returns forfiguring out a home office deduction. Mark Steber, chief tax officer at Jackson Hewitt, said many taxpayers who own a small business or work from home may qualify for a home office deduction, but don’t take it because of the complexity. The new method might help. The office area must be used on a regular basis for business and be either for the convenience of the employer, or used by a self-employed person to meet clients. The space must be used exclusively for the business; it can’t be used to store seasonal decorations, as a guest room or entertainment room.

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2. Do you have college-age children? Or did you head back to college yourself? The American Opportunity Credit is worth up to $2,500 per eligible college student. The Lifetime Learning Credit can apply for college students, graduate school and professional degrees. Income limits and other rules apply. Get Form 1098-T to show the student attended an eligible institution.

3. Don’t overlook a 0% rate on long-term capital gains. Yes, it’s a limited tax break that applies in 2013 for married couples with a taxable income of $72,500 or less; the limit is $36,250 for single filers. If you hold onto stock for longer than 12 months, you can benefit from a reduced tax rate on long-term capital gains. But remember, your taxable income is going to include capital gains.

4. Casualty losses are generally deductible in the year the casualty occurred.But not always. Barbara Weltman, author of “J.K. Lasser’s 1,001 Deductions and Tax Breaks 2014,” noted there are some cases where you can take the disaster loss in the preceding tax year, if you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance. For example, Colorado flood victims have until Oct. 15, 2014, to decide when to claim disaster losses arising from last September’s flooding.

5. Cash any U.S. savings bonds in 2013? Typically, interest is taxable on federal returns, but not on the state income tax return. Some very complex rules give you a shot at being able to exclude income on federal taxes, if the savings bonds were cashed in the same year that the money was used for college tuition. The college-education related tax break would apply to a Series EE bond issued in 1990 or after or a Series I Bond if your modified adjusted gross income is less than $142,050 if married filing jointly. Another twist: The bond owner listed on the bond must be at least 24 years old before the bond’s issue date. If you claim the exclusion, the IRS warns that it will check it against bond redemption information from the Department of Treasury. You’d have to pay qualified education expenses for yourself, your spouse, or a dependent for whom you claim an exemption on your return. So, no grandparents cannot use the tax break unless the grandchild is their dependent.

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Source: USA Today | Susan Tompor