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How To Save on Your Taxes

How To Save on Your Taxes


When tax season comes around, getting the most out of your tax return to save you from paying more in income tax is the bottom line. Let us, at Tax Problem Resolutions, Inc. assist you in every way possible in maximizing your tax savings. We can do this a handful of ways; some of them are even accomplished before its time to add up all the earnings and expenses at the end of the year! To get your money working for you year round, let’s go over some of your options.


As a tax preparer, I’m often presented with questions on how best to save on people’s income taxes. The most obvious and upfront start is going to be deciding which deduction to take when it’s time to file your return. You have two options, the standardized deduction and the itemized deduction. Standardized deductions are going to take your filing status (single, married filing jointly, married filing separately, head of household, qualifying widow, or qualifying widower) and will allow you a set monetary amount to claim as your deduction. This amount, starting at $6,300 and going up to $12,600 will be subtracted from your adjusted gross income (AGI). Essentially what this means is the amount of income that the IRS will tax is now lower. The other option is the itemized deduction option. With this option you’re allowed to add up all qualifying expenses you paid for out of pocket the previous year and deduct those from your return. Things like mortgage insurance, mortgage taxes, and if you purchased a home the deductible points you received from that transaction can be itemized. Most mortgage companies will issue you a form 1098 that will contain all the pertinent and relevant information for tax time. Charitable donations and medical or dental expenses are also eligible for deduction, as long as they qualify under the IRS’s strict regulations. Charities must be approved by the IRS in order to receive tax exempt donations, and you must obtain documentation with the value of your donations, whether they’re monetary, goods, or even services. Medical and dental expenses also have to exceed a certain percentage of your AGI. So it may be in your best interest to find a tax preparer or accountant to assist you in determining what counts, and what you won’t be able to write off. Another big and really important category to find itemized deductions, is your self-employment or small business expenses. Supplies, new equipment, website design fees, home office expenses, and a multitude of other costs that help make your business function day to day are most likely tax deductible. Just remember, you can only choose one deduction option, either standardized or itemized. 


If you’re looking to make your savings stretch throughout the entire year, there are countless other available investment options year round. Contributing to workplace savings opportunities is an excellent way to save on your taxes. Plans like the 401(k) can really maximize not only your tax savings, but your working dollar, too. Tax on these types of plans are deferred, so contributing the most you’re allowed keeps your taxable paycheck smaller. On top of this, if your employer matches your contribution, you’re earning even more tax deferred money and your money is growing in savings for you. If you’ve been receiving large tax refunds yearly, a really easy way to see more money in your pocket is to adjust your allowances on your W-4s. The ultimate goal at tax time is to have the exact amount you will owe in income tax for the year pulled from your paychecks. In a perfect world, your tax refund would equal zero. If you’re ending up with a tax return, that’s basically money of yours that you’ve paid the government, and they’ve held onto it free of charge.


Tax credits are another great way to save on your income taxes owed. Child tax credits, child care tax credits, even the earned income credit (EIC) are a few credits that you may not even know about. All three of these credits of course are based on whether or not you have children and what your income tax bracket is, but they’re still absolutely worth looking into! There are, as with any other tax regulation, stipulations to keep you in accordance with the IRS rules surrounding who can take the deductions for the child care tax credit (For example, you both must be working). An accountant can even point you in the direction of more credits, such as the lifetime learning credit, a credit that was established to help offset the cost of post-secondary education. You might want to learn more about the savers tax credit, which was set up to encourage people to contribute to qualifying 401(k) and other savings plans. 


How about going green? 


If you’ve made an effort to reduce energy costs or have installed special energy saving equipment that offer renewable energy sources, you may be able to write that off. Solar panels, modified water heaters and air units can bring you up to 30% of the cost of the equipment or property. There are certainly other credits out there so finding someone like I to assist you traverse these murky waters might help bring a little clarity to the complicated matter of filing your federal taxes.


Do you still have questions on how to save on your taxes? Find a tax professional for tax savings at Tax Problem Resolutions, Inc. We’re here to do everything in our power to find you the most qualifying deductions and even set your money up for success in the following years. Learn more about us by clicking the link below, or better yet, schedule an appointment at our office at 300 North Ronald Reagan Boulevard, #207, Longwood, FL 32750 and ask for Linda Biller!


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