Married, Double income, No Kids - How do we get the most money at tax time?

My husband and I both work, we rent a home and have no children. Every year at tax time we get slammed with taxes! It seems like the more we work, the worst it is for us come tax time. This last year, I had $20 taken out of my check for taxes and my husband takes an extra $10 off of his. In 2006 we ended up paying $800 plus dollars in taxes. My husband take the train everyday about (50 miles each way) everyday. People have told me he can claim his train passes (monthly passes). He also is in a union, can he claim his union dues? What can we claim? Should we go to an accountant? I usually file an E-Z form and mail it in. Should I go to a tax office and itemize (HR Block, Jackson Hewitt, etc.)? I feel even worst when I leave there because then they want their fee too! How can I get the most money back?

I don't think there's a lot you can do. When you have two incomes, and not a lot of deductions, you end up owing a lot of taxes. The big deductions that people get are for mortgage interest, and children... But, getting a deduction isn't a reason to have a child or take on a big mortgage.

If you want to see if you're missing deductions you could invest $50 or so in a tax software program (turbo-tax or tax cut or something like that). They will walk you though questions to see if you are missing some deductions. It will be less expensive than H&R block, and Much less expensive than a CPA. If you want to see what kinds of things are deductable, you can also go to the IRS website, and browse the tax topics. The 500 series deals with itemized deductions. http://www.irs.gov/taxtopics/tc500.html

Other ways to lower your taxible income include contributions to 401(k)'s at work (if available) or to an IRA (if you're within the income limits). If either of you are self-employed, then you might have other pre-tax investing options to shield current income from taxes.

As for the Train passes. I know that in some states, some insurance companies will give you a break on your insurance premium if you can show you're using public transit for commuting. So, you can check there. It wouldn't help with tax time, but could help lower another bill.

I hope that helps.

Definitely AT LEAST go to H&R Block or another tax preparer. I think that your situation doesn't quite warrant a tax CPA yet. When you purchase a home or have other investments, it will get complicated enough to require an accountant. A tax preparation office will be able to tell you if your deductions are enough to actually claim. It's hard to answer your questions about your possible deductions without seeing your numbers (not asking, just explaining). I know it's a bummer to pay a fee, but it's WELL worth it. Years ago before I became an accountant, I filed my own taxes and received $64 back. The next year, I had H&R Block prepare them. When I realized what I was getting back that year (over $1000), I filed an ammendment for the previous year and received over $1000. It was so worth the minimal fee to have their expertise and receive more money.

If your husband is a W-2 employee, then he cannot deduct his train passes since they are part of his commuting to work. Union dues are deductable but are limited to anything over 2% of AGI. By the sounds of things you won't have enough to itemize unless charitable contributions are material.

You might consider funding an IRA or HSA. That would give you a few ways to shelter some income from tax. However, if you contribute to an IRA or HSA, you can't pull the money back out if the car breaks down. Their really isn't alot else that you can do...sorry.

I highly recommend taking your taxes to an accountant once every three years. They know all the tax laws and most will do a quick review of two prior years returns for free. If they find something you missed, you still have time to file an amendment and get back the money you missed.

You're gonna have a hard time itemizing with no real deductions... your best bet as mentioned above is funding a regular IRA.

He can't claim his train passes - that's commuting expense and not deductible. He can claim union dues, but only if you have enough expenses to itemize and if you rent, you probably don't have.

Other than buying a house (which usually isn't the huge tax savings many people think it is) there's not much you can do. If you have a 401K available to you at work, putting money into that would cut your tax bill - or investing in a traditional IRA will cut it also - a Roth IRA won't cut your current tax bill, but might turn out to be a better deal for you than a traditional IRA.

Are you paying student loans? You can deduct some or all of the interest paid that year even if you don't itemize.