All taxpayers today are concerned about the amount of taxes they pay and due to this they are looking for ways of reducing the income tax. The way you file your tax returns matters a lot and it can determine whether you will pay less income tax or not. If you don’t do a lot of research about this then you will automatically end up paying more income tax. Avoiding such mistakes in the future is easy and this article helps you to avoid them and get the most money back.
Claiming all credits
It is easy to reduce your tax bill with credits as compared to doing it with deductions. Do you know why it is easy? It is simply because credits are netted directly from the income that you owe. Some of the available credits that can assist you to reduce income tax are.
- Education tax credits-These are credits that are set for the purpose of ensuring that the cost of your education is offset.
- Additional child tax credit/the child tax credit- these kinds of credit are usually available to those people who have children and those children must qualify. In this case you claim the dependent care credit.
- Earned income tax credit- The earned income tax credit is for those people or individuals earning less than $9, 078 from self-employment, farming or from wages.
Claim all the deductions
Do you understand what it means by deductions in tax? These are the qualified expenses that have the ability to reduce your taxable income. There are several deductions but most of the taxpayers usually focus more on the well known and common deductions. There are also other uncommon deductions that one may qualify for and these deductions include.
- Charitable donations- There are different kinds of charitable organisations in the world today and if you happen to have donated anything to these organisations, the value of what you donated is deductible. It is therefore in order and advisable that you keep the receipts of what you donated or the items you gave because they may be required later by the IRS. The IRS requires one to ensure that he or she has the written confirmation of all the charitable donations made whether small or big.
- Travel expenses- Travel expenses should be deducted and more especially when you were given an assignment that was far from your home.
- Job search expenses- All expenses that are searching for a job should be deducted if you want to make more out of your tax refunds. Whether you got the job or not it is important that they are deducted but the job that you were looking for should be similar to your present occupation.
- Fees to professional societies- These fees are paid for various purposes for example you can pay them when you want to maintain your membership to these societies or for professional purposes like professional certification. These fees should also be deducted so that your income tax can reduce.
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