End of Year Tax Tips

A few good tax tips to remember at the end of the year from the Arizona Daily Star:
Energy efficiency

• Energy improvements made to your home — better insulation, windows and heating or cooling systems — can earn you up to $500 in credits.
• The addition of solar power to help heat your home and/or your water can earn you up to $2,000 in credits.
• The purchase of a hybrid or alternative-fuel vehicle can earn credits ranging from $250 to more than $3,000.

Education

• Arizona also offers credits of up to $400 for contributing to extracurricular public-school fees such as band and athletic uniforms, science materials, trips for competitive events and "character-education programs."
• Arizona offers a credit for contributions to private-school scholarships of up to $1,000 for married couples filing jointly.
  

Income

• Make your Jan. 1 mortgage payment on or before Dec. 31. This allows you to take an additional deduction for interest paid, provided you remember to add the amount reported by your lender on your 1098 form.
• Prepay state and local taxes, which allows you to take a deduction for this tax year.
• Defer income until the beginning of 2007. Many people don't have a choice as to when they get paid, but if you have a bonus coming, ask if it can be delayed.
• Offset capital gains. Sell investments that have lost value by year-end to offset the taxes you'll owe on capital gains from investments that appreciated.
  

Little-known deductions

• The depreciation on your home computer is deductible if you use it to generate income.
• The depreciation on your computer and cell phone is deductible if you use them for work as required by your employer.
• Money spent on job searches in your present occupation are deductible, even if you don't get a new job.