Ten opportunities for saving tax dollars

that you’re probably not taking

This is crunch time for all of you tax return procrastinators. There are only 21 days until April 17, the final date for postmarking your 1999 federal and Indiana income tax returns. You may have already done the computations, and found out that you owe more than you expected, or that your refund is not as much as you would like it to be.

As kind and gentle as the taxing authorities may seem these days, don’t expect them to go out of their way to tell you about all the deductions you forgot to take or credits that you could have used to reduce your taxes. If you pay too little in taxes, you’ll hear about it for sure; if you pay too much, you may never know.

1. Child Tax Credit. The number one most overlooked tax savings vehicle for 1998 was the Child Tax Credit, which was new in that year. Now in its second year, the tax credit is worth $500 per child. This is a credit, not a deduction, which means your tax is reduced dollar for dollar. The child must be claimed as your dependent, and must be under age 17 on 12/31/99. Take the credit for each qualifying child on line 43 of the 1040 or line 28 of the 1040A.

2. Lifetime Learning Credit. Here’s another tax credit that can benefit people of all ages. If you, your spouse, or a dependent attended post-secondary school, whether it was for one course or as a full-time student, your tuition costs and related fees may qualify for this credit. Fill out Form 8863, Education Credits, to see if you qualify.

3. Indiana Property Tax Deduction. New for 1999, homeowners may take a deduction on their Indiana income tax returns for property tax paid during 1999, up to a total of $2,500. Fill out line 2 on Schedule 1 and attach that schedule to your IT-40.

4. Indiana Insulation Deduction. Did you install storm windows or storm doors, add weather stripping, or install insulation in your home during 1999? If so, you may qualify for a deduction of up to $1,000 of your cost on your Indiana income tax return. The insulation must be an upgrade, not an equal replacement (replacing a broken storm window won’t qualify). Claim the deduction on line 9 of Schedule 1 and attach the schedule to your IT-40.

5. Non-Cash Contributions. If you donate used clothing, furniture, books, appliances, electronic equipment, toys, automobiles, baked goods, and so on, to a qualified charity such as Goodwill, the Salvation Army, a church, or a school, you may take a charitable contribution deduction for the value of the donated items. You must be able to itemize your deductions to take advantage of this tax break, and you need to get a receipt when you make the deduction if the value of the donated items is at least $250.

6. Charitable Mileage. If you drove your personal car for charity, you may deduct 14¢ per mile for your efforts. Your records should include the number of miles you drove, where you went, and the name of the charity. Charitable mileage includes driving for church and school events, delivering meals or groceries to shut-ins, driving for little league or scouting events, and so on.

7. Roth IRA Contribution. If your adjusted gross income is below $110,000 (below $160,000 if you are married filing jointly), you need to contribute $2,000 to a Roth IRA. Okay, so you don’t get a tax deduction. Big deal. The money grows and grows and someday, when you decide to take the money out, you pay no tax on anything the account earned. The longer you leave the money in the account, the higher the rewards. [Note: Married filing separately taxpayers who lived with their spouse at any time during the year are prohibited from Roth contributions if their income is $10,000 or more.]

8. Vehicle Registration Fee. Go out to the car and get your registration form out of the glove compartment. See where it says, “County Tax?” That amount counts as a property tax deduction on line 7 of Schedule A, Itemized Deductions.

9. Student Loan Interest. If you paid interest on a college loan during 1999, the amount you paid may qualify as an adjustment to income (better than an itemized deduction). There are limits to how much you can earn and still take this deduction. If you qualify, enter the deduction on line 24, page one of your 1040, or line 16, page one of the 1040A.

10. Moving Expense. Did you move during 1999? More than 50 miles from your previous job? Are you working now? If so, you probably qualify for a moving expense deduction. If your employer reimbursed you for the move, the amount of the reimbursement is probably included with your W-2 income, in which case you must take the deduction in order to offset that income. Claim the deduction on line 26 of your 1040. Only the cost of actually moving yourself, your family, and your belongings qualifies for the deduction.