Chicago Weekend Fun!

It is that time of year again, Tax Preparation Season in Chicago. (it can ruin many weekends before April 15th) You get through Christmas and the Super Bowl and very quietly your 1099′s sneak up on you when you aren’t looking. Tax Preparation in Chicago can be just as challenging as any other location in the US and it is a lot harder to make the trek out to an accountant when it is below zero here.

The tax season is a different process for everyone. Whether you use a paper form 1040 EZ, an online form, TurboTax, H&R Block TaxCut, go to a tax preparing service like Jackson Hewitt or H&R Block or have your own personal accountant, there are deductions your should know about.

Personally I got to use the energy credit for new energy star windows last year which was thrilling considering how much they cost up front. I also started using TurboTax a few years ago and have enjoyed doing my taxes online with their Q & A format. I actually don’t dread doing my taxes anymore thanks to TurboTax.

I actually think the ads that say an accountant will find you thousands of dollars in refunds is a bit misleading. The people who own businesses and have complicated situations may find more deductions with H&R Block or Jackson Hewitt, but someone single and uncomplicated like me does just fine with an online tax preparation program.

Here are some tips and resources to help you through the tax season in Chicago for 2008 in 2009. I do need to state that I am not a tax professional by any means, but through some research I was able to find these tips that I wanted to share.

This is a helpful list of green tax credits you can claim in 2009.

$150 for some Energy Star furnaces/boilers
$200 for all Energy Star windows
$300 for some Energy Star heat pumps and central AC
$500 for insulation and sealing that meets model building code
$3,150 for the purchase of a hybrid car or SUV

Also, the federal limit in tax credits for home improvements is $500. More information on state tax credits can be found at the Database of State Incentives for Renewable and Efficiency.

This is also a list of common income tax deductions that are often missed:

1. State sales taxes as a deductions.This only applies if you live in a state without income tax like Oregon but work in a state that does have it like Washington. Keep track of these expenses during the year by saving receipts or logging them in Excel.
2. Reinvested dividends. This is more of a tax break since those dividends never got taxed. Bonus!
3. Out-of-pocket deductible charitable contributions. This includes mileage driven for charity and cash donations.
4. Deductible Student loan interest paid by parents. Since the IRS treats student loan repayments by parents as a gift to their child, students that aren’t claimed as dependents can actually deduct up to $2,500 of the loan interest paid by their parents.
5. Moving expense to take your first job. As long as you move more than 50 miles, you can deduct the cost of getting yourself and your stuff to the new locale. You can even deduct mileage.
6. Military reservists travel expenses. Members of the National Guard or military reserve can deduct travel expenses related to drills or meetings as long as they travel over 100 miles and are away overnight. The deduction covers the cost of lodging plus half the cost of your meals. You can also deduct mileage, parking fees, and tolls.
7. Child-care credits. If you pay someone to take care of your kids such that you can work, you might qualify for a tax credit. Note that this is true even if you claim your childcare-related expenses through a tax-favored reimbursement account at work because such accounts are capped at $5,000 while expenses up to $6,000 can qualify for the credit.
8. Estate tax on income in respect of a decedent. You can get an income-tax deduction for the amount of estate tax paid on an IRA the you inherit from someone else.
9. Any State tax you paid last spring. If you owed state taxes when you filed your 2007 return, you can deduct that amount along with the state income taxes that were withheld during 2008.
10. Deductible Mortgage Refinancing points. Any points that you pay when you refinance can be deducted (on a monthly basis) over the life of the new loan. Moreover, all unamortized mortgage points left over from prior years are deducted all at once if you end up refinancing your mortgage in any particular year.
11. Jury pay paid to employer. Some employers continue to pay their employees’ full salary when they’re on jury duty, but require that the employees turn over their jury pay. Since the IRS views this as taxable income, you need to be sure to deduct it. If you don’t, you’ll end up paying double taxes on a portion of your income.