Tax season is more often than not met with grumbles and a chaotic race to file. While agonizing over taxes can be stressful and time-consuming, it can also be a great way to save and earn money for your family. We talked with Lisa Greene-Lewis, a Lead CPA for the American Tax and Financial Center at TurboTax to find out all the ways your taxes can pay you back. Need more incentive? According to TurboTax, upward of one billion dollars goes unclaimed by taxpayers each year
The Benefits of Having Kids
When it comes to your taxes, having children and dependents is a blessing. According to Greene-Lewis, claiming dependents is one of the biggest areas taxpayers make mistakes. Children are dependents if: they are children under age 19 by the end of the year, under age 24 by the end of the year and a full time student, are permanently and totally disabled (at any age), have lived with you for more than half of the year, have not provided more than 50% of their own support for the year and are not filing a joint return for the year. Check out these two deductions for having children:
Child Tax Credit: For each child under 17 you can claim the Child Tax Credit, which is a $1,000 credit.
Child and Dependent Care Credit: If you pay for any sort of childcare (nursery school, private kindergarten, after school programs and day care all qualify) for children under 13, you can claim the Child and Dependent Care Credit, which can be worth up to $2,100.
Children Aren’t Your Only Dependents
There are a few different kinds of dependents that the Internal Revenue Service recognizes and lets you claim on your taxes. Children are of course dependents, but so are relatives. Relatives are dependents if they aren’t being claimed as a qualifying child of any other taxpayer, are related to you (by IRS specifications), are living with you full time (such as a live-in boyfriend of or girlfriend whose relationship doesn’t violate local law), meets the gross income test and receives more than half of their support for the year from you.
The Earned Income Tax Credit
While you qualify for a bigger tax credit when you have children, you don’t have to have children for the Earned Income Tax Credit. If you have three or more children and earn up to $45,060, two children and earn up to $41,952, one child and earn up to $36,920 or no children and earn up to $13,980 you can receive this refundable tax credit ranging from $475 to $5,891. The restrictions here come if you are married and file separately or if you share custody and the child lives in your household for less than half of the year.
Being Charitable Treats You Charitably
Charitable donations are an easy way to rake in some deductions. Any time you donate clothes or food – as long as you keep the receipt – you can claim it as a deduction. Did you drive to volunteer at an event? The IRS reimburses you to the tune of $0.14 per mile and up to your whole plane ticket as well as any other hotel and travel expenses so long as they’re directly related to the charitable work.
New brides who sell their wedding dress or any decorations from their ceremony and reception are eligible for “fair market value” deductions, which can be calculated by TurboTax with the ItsDeductible tool.
Working From Home
Deducting a portion of the spaces you use for business (like your home office) is easier than most people think. It’ll require a little math – not more than some addition and subtraction– to find out what percentage of your home is dedicated to your home office. You can also deduct the cost of computers, printers and any devices purchased that are directly related to your business. Keeping a record of receipts is just as important for this deduction as it is for your charitable donations.
Medical Expenses Count, Too
If your medical expenses for 2012 exceeded 7.5% of your adjusted gross income, you claim them for deduction. Not everything can be categorized as a “medical expense” and be deducted (contact lens solution? Not so fast). It has to be related to the diagnosis or directly improving your health in order to be deducted. If you’re overweight and your doctor prescribes a work out regiment that requires joining a gym, that counts! As long as it can improve an existing condition (and can be backed by a doctor’s note), it can be deducted.
Write Off That Job-Related Move
While there are distance tests you’ll have to prove, moving for a job can be deducted from your taxes. Your new job has to be at least 50 miles from your old home to count, but if it does then any cost associated with the move can go on your tax documents. Movers, storage, boxes, transportation and even the expense of staying in a hotel during the move (if your move required more than a days’ worth of travel) all count as long as you have the receipts on hand.
Claim Forgotten Deductibles From Years Past
After reading this story there’s a chance you missed one or more of these deductions in a recent tax return. Luckily, going back into a previous years’ tax return is possible and lets you amend anything submitted in the last three years. Just fill out a 1040x Amended U.S. Individual Income Tax Return form for the same tax year you want to correct. You’ll need to mail this form into the IRS and it will then take them about 8-12 weeks to process the proposed amendment.
Get Your Refund Faster
Filing online and using direct deposit can help you get your refund weeks faster than mailing your taxes and waiting for a check. Online filing services like TurboTax have CPAs and enrolled agents available, which, along with FAQs, allow you to receive around-the-clock assistance with your tax return.
From Allyou.com/ Posted by Mags
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