Tax Breaks for Everyone!

If your income lands you in an upper tax bracket, you’re already aware of what are known as “stealth taxes.” Stealth taxes occur when your high income reduces or the personal exemptions you can claim, disqualifies you from some educational and child care credits, or cuts into the amount of your itemized deductions.

But tax experts have some good news - there are tax breaks of which you can take advantage of no matter how high your income.

Perhaps the biggest break goes to the self-employed, who can contribute up to $49,000 to a Simplified Employee Retirement Plan and deduct the entire amount. You can even get the deduction on this year’s tax bill if you don’t already have a retirement plan in place. You can set up the SEP now and make a deductible contribution by April 15 that will count toward your 2009 tax bill. If you’ve asked for an extension, your deadline gets pushed back to October 15. For a full rundown on SEP rules and regulations, go to the IRS Web site.

If you worked at more than one job last year, you may have overpaid your Social Security taxes. Add up the Social Security taxes on your W-2 forms and deduct any amount over $6,621.60. There’s no special paperwork needed; there’s a line for the deduction on your 1040 form. And if you got lucky in Las Vegas, can use any gambling losses to offset your winnings, which are taxable. You’ll need proof of your how much you lost, though; keeping a running diary of gambling profits and losses can help.