Tips

Looking to save money on your Federal income taxes?
Look at these tips for 2005 and 2006.

For 2005

1. Business of your personal car – 40.5 cents per mile for Jan. 1 thru Aug. 31. 48.5 cents per mile for Sept. 1 thru Dec 31.

2. If you have a non-incorporated business and purchase an SUV car for the business that weighs more than 6,000 pounds, you may deduct up to $25,000 of the cost of the SUV in your personal business.

3. Purchase of a hybrid car in qualifies for a $2,000 deduction

4. Charitable Giving – The Hurricane Katrina Emergency Relief Tax Act 0f 2005 lifts the 50% of adjusted gross income limit and phase out rule for eligible donations made between Aug 28 and Dec 31. So give now!

5. The maximum 401K contribution is $14,000 plus an extra $4,000 “catch up” contribution for those 50 or older.

6. Florida residents have the benefit of a sales tax deduction. You have the choice of using the IRS tables or the actual amount you paid during the year. If you purchased big ticket items such as cars & boats, you can deduct the sales tax on those items on top of the amount in the sales tax tables.

For 2006

1. Purchase of a hybrid car in qualifies for a tax credit ranging between $650 and $3.400. The credits are limited to the first 60,000 vehicles purchased from each automaker. This incentive expires Dec 31, 2010

2. High income taxpayers will be able to use more of their itemized deductions in 2006 because the reduction in itemized deductions for high income taxpayers starts to “phase out” in 2006.

3. Energy Efficient Homes – Between Jan. 1 2006 and Dec. 31, 2007, two new residential energy tax credits are available for certain types of energy-efficient property that meets eligibility requirements. The maximum credit for home improvements such as insulation and external doors is 10% of the cost up to a maximum lifetime credit of $500. The maximum credit for the cost of a solar water heater is 30% of the cost up to $2,000.
   1. Exterior doors
   2. Heat umps
   3. Water heaters
   4. Central a/c
   5. Furnace or hot water boilers
   6. Fans used in natural gas, propane, or oil furnaces
   7. Insulation material or system specifically & primarily designed to reduce heat gain of a dwelling
   8. Exterior windows (including skylights)
   9. Qualified property for producing solar energy
   10. Qualified solar water heating property
   11. Qualified property

These credits are also available for condo or co-op owners.