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The first step in your income tax preparation is to work out your total income. A person?s total income includes many kinds of receipts such as wages, interest, alimony, lottery winnings and many more. It is important to gather all of the appropriate information for any money you have received during the appropriate tax year before you start your income tax preparation. Be extremely thorough in this aspect of your income tax preparation because the financial penalties for not including all forms of income can be severe.

The second step in your income tax preparation process is calculating the amount of deductions that you can apply to your total income. There are two basic categories of deductions to consider Itemized and standard deductions and Adjustments and exemptions. The next stage of your income tax preparation is to subtract your deductions from your total income to calculate your taxable income and look up your taxable income in the table that is supplied with the tax form. This gives you the amount of tax that you need to pay. The final stage of your income tax preparation is to subtract your tax payments, such as employer withholdings, and credits. After you have finished your income tax preparation you will know if your payments and credits exceed the tax required or not.

If you want to ensure that you pay the lowest amount of tax possible you will want to spend a lot of your income tax preparation time working out if you have more itemized deductions than the standard deduction amount. The standard deduction depends on your filing status and is adjusted each year for inflation. For most people the standard deduction is greater than the total of their itemized deduction but it is still worth calculating an itemized deduction total as part of your income tax preparation. Medical expenses, state and local taxes, mortgage interest and investment expenses are just some of the items that can be included in itemized deductions. Adjustments are deductions you're allowed to claim and should be assessed very carefully during your income tax preparation. Every taxpayer, and their dependents, also qualifies for a personal exemption and during your income tax preparation ensure that you have included all of your qualifying dependents.

Learn more about Tax Software and gain access to a wide variety of resources at http://www.alltaxsoftware.info You'll find articles, resources and links to helpful sites.

Someone once said, ?the best way to calculate your taxes is?Honestly?. For 2005, add ?Smartly? to that and you?ll get to keep more than you make. This April 15th is going to be the day of reckoning for every taxpayer. If you are smart enough with your accounting and keep your eyes and ears open, this could be your favorite day of the year. Take full advantage of tax deductions due you and you can come back richer from the IRS office.

As a home business owner who has been keeping track of every dollar spent, you can make a killing on your tax deductions with these smart taxpayer tips.

1. Jot it all down: keep a track of all your business expenses. Maintaining timely and accurate records is something you?ll thank yourself for, this April. You don?t necessarily need elaborate documentation to do this. An easy and a very cost effective way would be to keep all your expenses jotted down in a diary. It is a good idea to collect evidence as well (in case the IRS decides to do an audit later) like receipts, bills, and statements for cheque payments etc.

2. Shop for your taxes: this financial year you will have a choice to either deduct your state income tax or your state sales tax. Do some math and compare the two to see which tax deduction is higher. Major purchases in the last financial year should be crosschecked to see in which category they yield a larger deduction.

3. Itemize your deductions: Before you decide to settle down for standard deductions ($4,850 for singles and $9700 for married couples filing jointly), fill out Schedule A to see if your itemized deductions are larger than the standard deductions. You might be in for a surprise. Consider itemized deductions in areas like: Home ownership, charitable donations, Medical expenses and miscellaneous deductions. According to the IRS's most recent numbers, those filers who itemized back in 2002 deducted an average of $19,673 from their taxes

4. Go beyond the usual deductions: This year look beyond the good ol? mortgage interest deduction to save some more. Consider medical and dental expenses, sales tax and personal property tax, education expense, damage cause by disaster or theft and miscellaneous expenses. Miscellaneous would include job search expenses, investment expenses like brokerage fees, safety deposit boxes and subscriptions to investment publications. Also included in miscellaneous is..Believe it or not? expenses of filing your taxes! This is still not over: add depreciation on your computer and cell phones used for business purposes.

5. Entertainment and meal expenses: no?this doesn?t include lunch with friend to swap Christmas part ideas. Establishing the business purpose of a meeting is crucial for deducting expenses on entertaining.

6. Transport expenses: if you use your own car for getting about on business, you can claim deductions on that too. Take care to religiously note down details like mileage, tolls, parking fees and maintenance costs.

A good way of finding out what more you can use for maximising your deduction is to get tax preparation software.

A word of caution here: keep ?creative deductions? like kid?s allowance, silicone implant etc. out of the picture. It is rather difficult to outrun the IRS, as they have three years to decide they want to verify your records and can drop in for a surprise audit.

Maximise your tax deductions in 2005 with these tips and see all the cash flow back in into your business.

Also see:

http://money.cnn.com/2005/03/30/pf/saving/willis_tips
http://www.bankrate.com/brm/search/story-taxes.asp

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As we sit in the middle of winter, most people can?t believe how high their utility bills are. Going with solar energy can lower your bills and you get a hefty tax credit

Solar Tax Credit

Solar energy is a clean, renewable energy source. The production of solar energy on residential and commercial structures creates no pollutants and is starting to make serious financial sense. In 35 states, the concept of net metering is now an established fact. Net metering simply means you can sell energy from solar panel systems back to utilities, thus eliminating or seriously reducing utility bills. As oil and natural gas costs skyrocket, the Federal Government is doing even more to promote the use of solar energy.

In 2005, Congress enacted the Energy Policy Act. As part of the act, a tax credit was established for any person purchasing and installing residential solar energy systems for electric and water heating purposes. If you purchase and install solar systems for either of these purposes, you can take a 30 percent tax credit. If you install systems for both of these purposes you can double the tax credit. To avoid tax abuse, each tax credit has a cap of $2,000.

Importantly, tax credits are far more valuable than tax deductions. Tax deductions are taken from your gross income prior to figuring the amount of tax owed. Tax credits are a dollar for dollar reduction of the actual amount of tax you owe. For instance, if you prepare your tax returns and find you owe $5,000 to the IRS, a tax credit would be deducted from this $5,000 figure. In short, a tax credit gives you a lot more bang for your buck.

To claim the solar tax credit, there are a few restrictions and requirements. First, you can?t claim the tax credit if you use the solar system to heat a hot tub or pool. Second, the system must be certified by a solar rating certification corporation to establish that you, in fact, installed a working system. Third, the system must be activated between January 1, 2005 and the end of 2007. Finally, you cannot claim the credit if the government gave you a grant or financing to purchase the system, to wit, no double dipping.

When solar energy is discussed as a potential alternative energy source, most supporters point to the environmental benefits. Ultimately, the benefits to ones bank account will really make the difference and the solar tax credit is a solid step in that direction.

Rick Chapo is with SolarCompanies.com, a directory of solar energy companies. Visit us to read more articles on solar power and renewable energy.