Wednesday, December 28, 2005

Time's running out for '05 tax deductions

ROMI CARRELL WITTMAN

Tucson Citizen

I did not do my part to help the American economy this Dec. 26.

Instead of rushing out to the after-Christmas sales, I stayed in and got prepared for something that has a bigger impact on my bottom line than any sale: my 2005 taxes.

To answer your question, yes, I have been called everything from "hyper-organized" to "anal retentive," terms I chose to take as compliments.

But this year I need to have everything in order.

The past year brought about many changes for me and my husband, all of which will have a big impact on the family tax return. For starters, we had a baby and incurred a lot of medical expenses.

And, we took part for the first time in a high-deductible health savings account health insurance plan.

Normally, I do our taxes myself with the help of a software program such as TurboTax; however, to err on the safe side, we'll probably be visiting with a tax professional this year just to make sure we dot our i's and cross our t's correctly.

While you may not wish to spend your holiday vacation sorting through the year's receipts, now is the time to sneak in those last-minute actions that could help you save big on your 2005 tax return.

If you itemize your deductions, you probably know that you can claim charitable donations as deductions on your tax return.

With only three days left in 2005, now is the time to contribute and get that check in their hot little hands. It doesn't matter if they don't cash it until the New Year - you still get to claim the deduction in 2005. The same goes for automobile and other large ticket donations.

Keep in mind that recent legislation passed after Hurricane Katrina has temporarily raised the minimum deductions for charitable giving. Go to www.irs.gov for details.

In addition, the Arizona Legislature has increased the tax credits available for donations to schools. Go to the Arizona Department of Revenue's homepage for more info at www.azdor.gov.

If you're a teacher, teacher's aide, counselor or other educator and you need to purchase supplies for your classroom, be sure to do so before midnight on Dec. 31. Teachers can take a deduction up to $250 for classroom materials.

Of course, your financial situation is unique to you. If you have questions about a particular tax issue, visit www.irs.gov. The Motley Fool'sWeb site at www.fool.com also has a lot of useful tax-related information.

If you find you still need some help, you may want to enlist the services of a tax professional to ensure that you, too, correctly dot the i's and cross the t's of your 2005 tax return.

Romi Carrell Wittman is a Tucson-based freelance writer. She has more than 10 years of experience in marketing, Web site strategy and corporate communications. She can be reached at r.wittman@cox.net.