Wednesday, January 21, 2009

Income Taxes: What You Need to Know

From the New York Times:

When it comes to income taxes, there are different types of people.

There are individuals who find pleasure in tackling the 1040 all on their own. At the other end of the spectrum, there are people who make a mad dash for the nearest H&R Block about 9 p.m. on April 15.

But no matter where you fall on that scale, it’s important to master the basics. Most of life’s milestones carry some sort of tax implication, whether it’s having a child, purchasing a home, changing jobs or, yes, even dying. And as you travel through life and your situation evolves, your approach to income taxes needs to be adjusted accordingly.

To complicate matters, the rulebook is constantly changing. So taxpayers must sort through a befuddling mix of new rules, deductions and credits each year. For some people, all of the noise is justification enough to pay an accountant.

Even if you do, there is still a variety of issues you should be aware of that will help you maximize your tax savings. This guide will explain how income taxes work and how to trim your bill, and offer a few approaches to tax preparation.

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