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Liberty Tax Service’s 10 Things to Do Now to Save on Your Tax Bill

Liberty Tax Service’s 10 Things to Do Now to Save on Your Tax Bill

VIRGINIA BEACH, Va., Nov. 4 /PRNewswire/ — Want to give yourself a tax cut this year? Liberty Tax Service urges you to take action now, examine your tax situation, and see if you can take some tax-saving measures before January 1.

A clearer understanding of a few recent tax changes can clarify whether the recently passed American Jobs Creation Act and Working Families Relief Act of 2004 can mean tax relief for you.

“Taxpayers can take now advantage of state sales tax deductions if they itemize deductions. Those who live in one of seven states without a state income tax may now deduct their state sales tax in tax years 2004 and 2005,” said John Hewitt, Founder and CEO of Liberty Tax Service. “Taxpayers in states with a state income tax can choose to deduct whichever tax liability is higher: their state income taxes or state sales taxes.”

The Working Families Relief Act of 2004 provides for a uniform definition of “child” throughout the tax code, and “earned income” now includes combat pay for those military families who may qualify to claim the earned income credit and the refundable additional child tax credit. This “extenders bill” will continue relief for couples impacted by the “marriage penalty” until 2010, keep the 10% tax bracket through 2010, and prolong higher alternative minimum tax exemptions through 2005.

Those considering stock sales before the end of the year should keep in mind that the maximum tax rate for most capital gains is generally 15%, 5% for those in lower income brackets.

Here’s a list of things to check before 12/31/04 that could add up to tax savings by April 15, 2005:

* Start gathering and organizing your sales receipts to take advantage of

the new sales tax deduction (or use the table that will be provided by

the IRS).

* See if there’s income you can defer until 2005.

* Teachers, find your receipts for $250 for qualified classroom supplies

you have purchased so that you may deduct them, or purchase more before

year’s end.

* Contribute monetary donations, and/or give clothes and items no longer

in use to non-profit organizations before December 31.

* If you’re car shopping and purchase a qualified model gas-electric

hybrid car, you will be eligible for the $2,000 Clean Fuel Credit that

has been extended for certain models.

* Double check to see if you have enough medical deductions to itemize

(over 7.5% of AGI). There’s still time to schedule that trip to the eye

doctor, or dentist if it’s to your tax advantage.

* Self-employed and use the cash method of accounting? Pay bills on or

before December 31, 2004 to claim the expense on this year’s return.

* Self-employed persons who can expense equipment up to $102,000 under

section 179 expensing can purchase additional but necessary items such

as computers and fax machines before January 1, 2005.

* Figure how you can make contributions to your IRAs or 401Ks before April

15, 2005 and calculate the difference it could make. The deductible

amount for a contribution to a traditional IRA is up to $3,000 per

person, up to $3,500 per person if age 50 or older.

* Make an extra mortgage payment or two so that you can deduct more

mortgage interest.

Liberty Tax Service has over 1,600 offices operating in the United States and Canada in 2004. This year, Entrepreneur magazine ranked Liberty Tax Service as the 9th fastest growing franchise opportunity, the 2nd in the Tax and Accounting industry, one of the top 20 low investment opportunities, and #28 on the overall list of best franchises. Accounting Today magazine ranked Liberty fastest growing on its list of top 100 tax & accounting companies released in March 2004. Liberty Tax Service is ranked for the second consecutive year on Inc. magazine’s 500 23rd annual ranking of the 500 fastest growing private companies in the United States (Fall 2004). The Liberty Tax Service web site is http://www.libertytax.com/.

CONTACT: Martha O’Gorman, Vice President of Marketing of Liberty Tax Service, +1-800-790-3863, or martha.ogorman@libtax.com

CONTACT: Martha O’Gorman, Vice President of Marketing of Liberty Tax Service, +1-800-790-3863, or martha.ogorman@libtax.com

Web site: http://www.libertytax.com/

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