Tax Deductions For Singles
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Being single is tough during tax time. I've been there. You can't file head of household, you can't claim a dependent and you just feel fleeced by the government. However, there are a few tax tips for singles.
Charity
Charities are one of the few tax deductions that a single person can take advantage of to lower their total tax bill. Many of us visit churches and donate to our church only, to ignore the donation slip that comes in the mail at the ruin of the year. Single people should never ignore tax-deductible donations.
Moving Expenses
Interesting expenses are infrequent but they can really help reduce your adjusted gross income and get you into a cheaper tax bracket. Of course, there are rules for how far you have to move to incur a moving expense tax deduction. Did you go for work reasons? Is the new job 50 miles away? Did you move your main residence? All of these factors have to be considered and all of them have to have a “yes” answer.
There is also a timeframe associated with sharp expenses. It is unlikely that you could move each year and deduct the expenses legally. You must work 39 weeks during the first 12 months you arrive in an area to deduct moving expenses. Odds are that if you move during the middle or end of the year, you won't have reached the 39 week benchmark by tax time.
IRAs
IRA are wonderful tax shelters for singles. Pre-tax money deposited in an IRA goes straight to your retirement portfolio and no tax will be paid until withdrawal. Stuffing this account with the maximum amount an employer will allow with a matching contribution is an excellent concept. If an employer will match 6 percent of your salary, make certain that you set in 9 percent. My rule of thumb is to do 150% of an employer match. Depending on how considerable you make, this amount can vary widely but don't forget to contribute to your child's college savings account during this process. For college education, I'd recommend the Coverdell Education Savings Account, it is a gigantic investment plan and distributions at the age of 18 aren't taxable as long your child uses it for college-related expenses.
Singles have far fewer tax shelters than married taxpayers do but there are some very good tax shelters for single people. Of course, the best tax shelter for all taxpayers is to buy a house, but you didn't need me to tell you that.
More from this contributor:
Hybrid Vehicle Tax Deduction
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Starting Your Contain Business
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Filed under Coverdell College Savings by on Dec 2nd, 2011. 