Accountant
It is officially tax time – a crucial time to reminisce the previous year with an eye toward maximizing tax credits and deductions and significantly lowering your tax burden. The most popular deductions normally include real estate taxes, mortgage interest and student loan interest of up to $2,500. And that is only the beginning. Other options basically include tax credit for child care costs, individual retirement accounts and retirement contributions to 401(k) s and even qualified education costs.
These 11 methods will greatly help you reduce tax bill this year:
1. Confirm whether you are eligible for the earned income tax credit.
The EITC (earned income tax credit), which basically applies to moderate- and low-income taxpayers, can provide credit as high as $6,000. But it is also for individuals earning less than $50,000 to check if this credit applies to them, I personally qualified when I became a parent and it is important to confirm whether you qualify because there are several people who qualify never realize and end up losing out on the benefit.
2. Launch a business.
Being an entrepreneur can also greatly improve your tax situation simply because business owners are in a position to take more control over exactly how they pay their taxes. They always have the option of keeping more cash in their business/company rather than drawing it down as income, and there is also a possibility of counting certain costs as expenses. It is wise to find a tax professional to help you -small business owners- navigate the ins and outs of the IRS (Internal Revenue Service) rules on possible expenses, which are lengthy.
3. Make sure you take advantage of your children.
The tax code provides certain benefits to parents, including the child tax credit (up to $1,000 for every child who is under age seventeen and phased out for high earners), credit for child care costs and also the ability to list more dependents in your home. Not forgetting that alimony payments are also tax deductible.
4. Ensure that you keep your mortgage for as long as possible.
It is no secret that mortgage interest payments are tax deductible, which simply means homeowners greatly benefit, from a tax perspective, by just keeping their mortgage for the longest time possible (contrary to paying it off early). Obviously, you have to properly balance that tax benefit against the extra interest payments suffered, and the contentment of paying off the debt if in case you have enough savings to afford to do so.
5. Ensure you money into college savings.
It is evident that just a small fraction of parents and guardians actually create 529 college savings accounts for their children, this simply means that they miss out on the tax benefit of allowing the money to grow tax-free. Providing the money is strictly for tuition, parents do not really have to pay taxes on the earnings. (They only invest after-tax money.)
6. Always give more money away.
In United States of America, charitable contributions are not the only type of tax-deductible gift. People can also get up to $13,000 without actually paying taxes, and parents can easily join forces to give every child $26,000 with a technique commonly known as “gift splitting.”
7. Make sure you save more money for retirement.
Willingly lowering your take-home paycheck by increasing your retirement contributions may turn out to be painful but only in the short-term, because it actually offers two benefits. Firstly, you get to beef up your retirement savings, and secondly, you significantly lower your tax burden. Cash funneled into particular types of retirement accounts, including IRAs and 401(k) s, is tax deductible, but within limits.
8. Become more energy efficient.
The national government normally encourages taxpayers to ensure their homes are more energy efficient by simply offering credits for a variety of moves, which include new windows or doors, installing insulation, and qualified cooling and heating systems. Particular alternative energy sources, such as solar panels, also qualify for tax credits.
9. Track medical expenses.
There are certain health-related expenses, such as supplies like bandages, acupuncture, and breast pumps that are tax deductible. To get a comprehensive list of eligible items, please visit irs.gov, and make sure you keep all receipts.
10. Check for ordinary losses on stock losers.
As a professional tax accountant, I realized that whilst last year saw a lot of stocks significantly go up, not every investment actually paid off. In fact, ordinary losses on the sale of stock can simply be deducted as capital losses, which can in turn offset capital gains for instance, capital gain distributions from mutual funds and even up to $1,500 for married couples filing separately or $3,000 of regular income.
11. Check whether you have any worthless securities.
As a professional tax preparer, I recommend that if you have a security that has become worthless – and it has to be completely worthless, not just because you have filed for bankruptcy, for instance – then you are allowed to deduct your loss. Make sure you treat the security as if you sold it on the very last day of the year when it actually became worthless, and you have about 7 solid years to do so. That simply means that you can always go back and check for any securities that became worthless in 2009 or even later.
I know that getting a competent tax professional in Rancho Cucamonga, California and it’s environ is not an easy task and that is why I recommend my services to you. With several years of experience, I will be able to give you the proper guideline and advice that will make sure you save the most out of your income. Contact S.Anderson's - Tax Professional today by clicking the link below and get the advice you lawfully deserve!
