Tax Time 2010

This time of the year just about everyone is scrambling to get their taxes completed and sent in. About half of all Americans file their tax returns after April 1st, so if you are just finishing up as the deadline looms, you aren’t alone. As Selena Maranjian of Motley Fool wrote late last week, now is actually a good time to be a tax payer because of all of tax breaks that are available.

Tax Credits Galore

While tax deductions are certainly nice, you can’t beat a healthy tax credit that goes straight off your balance owed. The American Opportunity Tax Credit pays up to $2,500 for those who are either seeking higher education or paying for a child’s higher education. The Making Work Pay tax credit gives up to $400 for individuals or $800 for a married couple and was a part of the stimulus bill passed over a year ago. Also, the $8,000 credit for first-time homebuyers is still intact, at least for the time being. These are all things that the tax payer needs to take advantage of.

Remember Those Tested Tax Tips

An Individual Retirement Account is a great way to defer taxes on up to $6,000 or save up a nice tax free chunk of change for your retirement. Do not sell stocks you’ve owned less than a year for a gain unless absolutely necessary, since you’ll be charged the ordinary income rate on these gains.

Be Proactive

There are so many different write-offs and tax credits available to you in this current environment. Since the government is trying to jumpstart the overall economy, taxes get slightly less burdensome for the average tax payer. Utilize all the tools at your disposal and gain the upper hand in the battle that is paying taxes.