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Credit Expert Bureau
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Tax
Training
5 tips for
making the most of your taxes this April
Get out your
shovel and prepare to dig through your finances. It's tax season, and if
you're like most Americans, you're probably knee deep in worksheets and
acronyms by now. Along with your income and investment calculations there
are a few things you should know about your credit and debt before you
file:
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Gone
But Not Forgotten - If you have had a debt cancelled this
year, you will probably have to record the forgiven amount as income
on your taxes. The pardoning lender should send you Form 1099-C, to
help you calculate the income amount. They will also send a copy to
the IRS, so be careful to include this amount in your filing. While
most of your cancelled debts are included, there are a few exceptions.
Debts that are discharged in a bankruptcy are not taxable. The same
goes for a cancelled student loan from a government agency. If you
borrowed from a family member or friend, and your debt is forgiven as
a gift, it's also not taxable to you. Check your
credit report online today to see if your cancelled debt is
tax-exempt.
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Home
Sweet Home - Mortgage borrowers can take advantage of
several tax breaks on behalf of Uncle Sam. The largest tax break is on
the mortgage interest that makes up most of your monthly payments.
Interest on home equity and cash-out refinancing loans is also
deductible. Plus, new homeowners can deduct the points they paid at
the loan signing. You can only deduct these points during the same
year as your home purchase.
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Filing
Follies - It used to take nothing more than a sharp pencil
and a couple stamps to send away your tax filing. Modern tax payers
now have the option to file with an accountant, tax preparer or online
electronically. Although rapid returns (aka: return anticipation
loans) are all the rage these days, they don't necessarily deliver
what they promise. If you file with a tax preparer to get the instant
return you may end up paying about $40 for the filing fee, up to $100
for the refund loan and another fee for preparing your documents just
to get your refund a few days earlier. Taxpayers who file on their own
electronically already receive their refund within 10 days. If you
qualify for free electronic tax filing (check the requirements at
www.irs.gov) it makes even more sense to do-it-yourself this April.
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Tax
Scams - Tax time can be lucrative for identity thieves. Be
careful with your financial information while you are preparing your
taxes. Investing in a paper shredder can help you prevent
dumpster-diving crooks from getting a peek at your private documents.
Also, don't give your financial information to someone claiming to be
from the IRS until you have checked out their authenticity. Check your
credit report online today for signs of fraudulent activity.
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Cash
Your Check - Expecting a big tax refund? Before you pick
out a new wide-screen TV, consider putting the tax rebate towards
reducing your debt. Bringing your debt down to a healthy level can
save you thousands in interest and can help boost your credit score.
Give your debt a check-up with a quick online Debt
and Income Analysis before you decide to spend. I think you'll see the
benefits of healthy credit will last longer than a swank new
entertainment center.
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