Pay Less Tax
STOP. BEFORE YOU FILE A SINGLE FORM, READ OUR ANNUAL TAX PREP GUIDE FOR THE MOVES AND NEWS YOU CAN'T AFFORD TO MISS
(MONEY Magazine) – We all need a little help sometimes, and most of us need a lot of help on April 15. This year help comes in the form of some new tax-cut tools. Bought a car in 2004? You may save with a new write-off. Gave a car to charity? Good, because in 2005 it won't help as much come tax time. What's more, you'll pay just 15% on your stock gains. You can save more money tax-free for retirement. And the IRS wants you to file online—for free. But a sneaky tax could leave you with a surprisingly high bill. Before you face April 15, read on.
76 HELP FOR FAMILIES 78 WHAT'S NEW 80 WHERE TO GO FOR HELP
THE WANGS GET TAX HELP WITH COLLEGE
Victor Wang and Lucy Liu's combined income of $110,000 rules out most financial aid, so the family has to shoulder the bulk of college costs. Their daughter Connie, 19, a freshman at the University of Pennsylvania, has a $2,000 National Merit Scholarship and a $2,600 Stafford loan; Victor, 48, an artist and professor, and Lucy, 43, a chemist, make up the remaining $34,000 in tuition and expenses out of their salaries and savings.
Fortunately, the couple can get a break on their taxes. Although their income puts two valuable credits out of reach—the Hope and lifetime learning credits—they can deduct $4,000 in tuition this year on their 1040. In the 25% tax bracket, that means a $1,000 savings at tax time.
For more on education tax breaks, see page 76.