Ok, boys and girls, its April 8th. Just one week to go before April 15th, the dreaded Ides of April when the [tag]IRS[/tag] wants your completed taxes in the mail. So, here are the [tag]Top 10 Last Minute Tax Tips[/tag] to save you money on your taxes and make them easier and faster to do.
Muni Taxes Stay the Same
The U.S. Supreme Court in a 7-2 decision upheld the central tenant of most state’s municipal bond tax policy, specifically that a state can exempt it’s own muni bonds from taxes while taxing the interest on other state’s muni bonds. So, nothing changes from before. If you live in California, the only way to avoid state tax on bond interest is to buy California Municipal Bonds. If you buy bonds from Texas, they can tax that interest. Taxes and Bonds Because interest on bonds is taxed as ordinary income, avoiding taxes on that interest is more important to investors than avoiding taxes on dividends paid by stocks. Most corporate bonds are taxed at both the federal and state level which reduces the real rate of return to the investor. Municipal bonds issued by states are exempt from federal income tax because one branch of the government cannot tax another branch. Whether or not the state municipal bonds are exempt from state income tax is determined by the laws of the states they are issued in. Most states make their own bonds tax-free as a way to make them more attractive for purchase. This tax-free status, plus the relative safety of …