2/12/2013

Tax Planning -

Reducing Income - Adjusted Gross Income (AGI) is a key element in determining your taxes. Lots of other things depend on your AGI (or modifications to your AGI)-- such as your tax rate and various tax credits. AGI even impacts your financial life outside of taxes: banks, mortgage lenders, and college financial aid programs all routinely ask for your adjusted gross income.

Increase Your Tax Deductions - Itemized deductions include expenses for health care, state and local taxes, personal property taxes (such as car registration fees), mortgage interest, gifts to charity, job-related expenses, tax preparation fees, and investment-related expenses. One key tax planning strategy is to keep track of your itemized expenses throughout the year using a spreadsheet or personal finance program. You can then quickly compare your itemized expenses with your standard deduction. You should always take the higher of your standard deduction or your itemized deduction.

Take Advantage of Tax Credits - The best tax credits are for adoption and college expenses. Not everyone is in a position to adopt a child, but everyone could take some college classes. There are two education-related tax credits. The Hope Credit is for students in their first two years of college. The Lifetime Learning Credit is for anyone taking college classes. The classes do not have to be related to your career.

EITC, Earned Income Tax Credit

2012 Tax Year

Earned Income and adjusted gross income (AGI) must each be less than:

• $45,060 ($50,270 married filing jointly) with three or more qualifying children
• $41,952 ($47,162 married filing jointly) with two qualifying children
• $36,920 ($42,130 married filing jointly) with one qualifying child
• $13,980 ($19,190 married filing jointly) with no qualifying children

Tax Year 2012 maximum credit:

• $5,891 with three or more qualifying children
• $5,236 with two qualifying children
• $3,169 with one qualifying child
• $475 with no qualifying children

Capital one 360 Interest > $100,000.00 - 0.85%

Ally Bank Online Saving - .90%

Capital one High Yield < $100,000.00 - 1.00%

American Express Savings - 0.90%

EverBank - $50,001 - $10,000,000 (1.01% (first 50k)- 0.76% (over 50k)) ongoing after first year 0.76% --- $50,000 or less first 6 month (1.25%)  1.01% first year ongoing 0.76%

CIT Savings > $25,000 - 1.00%