Many of us are already feeling the stress as April 17th approaches. If you’re not an organized person, you’re probably thinking about all the receipts you need to gather together not about how to possibly change your filing status. However, that may be the key to getting a nice refund. If you are organized and have tried your best to offset your costs against your income, you may be worried that you’ll owe some money on tax day. Basically, everyone wants to pay as little as possible on our taxes so we’re going to show you how you can save.
What’s Your Filing Status?
Your filing status is important because it determines the amount of your refund. Your filing status sets your deductions and the tax credits you’re eligible to receive.
Married or Single
If you’re married, filing jointly may not always be the most cost-saving option. Most people are unaware of this fact. Filing separately may have more of an upfront cost and it may be more time consuming, but it may end up saving you thousands, especially if one of you have had heavy medical expenses or COBRA payments resulting from unemployment. If one of you has exceedingly high travel expenses for their work, you may also seriously consider filing separately. Unemployed people often have heavy costs too, for networking, job training and other such expenses. Again, you may save money with those deductions if you file separately from a spouse. The best thing to do is to estimate your taxes both separately and jointly and make the right decision afterwards. You can even do the estimate on your own using TurboTax or some such tax tool.
If you take care of elderly parents and are considered unmarried for the tax year, you may be able to qualify for the head-of-household status if you paid more than half the cost of maintaining their housing, food and, again, Homeowners Insurance or Renters Insurance.
If you are a widow(er) with a dependent child and your spouse died within the last two tax years and you have not remarried, you may qualify for head-of-household status.
As long as one or more children lived under your roof for more than six months and you paid more than 50% of the cost of mortgage/rent, utilities, Homeowners Insurance and Renters Insurance, your expenses may be deductible because you qualify for head-of-household status. To qualify for the dependent care credit, your child must be under the age of 13 and unable to care for him/herself and lives with you for more than half the year. You may also be eligible for this type of credit if your spouse is incapable of self-care and lives with you for more than half the year. Expenses are capped at $3,000.
Claiming 0 or 1 On Your Taxes
If you want a bigger refund claiming zero will get you that. You’ll have more withheld from your paychecks so you get more at the end of the tax year. But if you want less money taken out of each paycheck and it means more to you than getting a bigger bundle at the end you should claim 1. You should also claim 0 if you have other sources of income that will be taxed at the end of the year. Otherwise, you may get no refund and end up owing instead!
What’s an Earned Income Tax Credit and Am I Eligible?
Working families and people who are self-employed or have a moderate-to-low income are often eligible for the Earned Income Tax Credit (EITC), which lowers your taxes and may result in a refund. To qualify you must have a Social Security number, be a U.S. citizen, a year-long resident alien or a non-resident alien married to an American citizen or resident alien and filing together. Your income must be self-employment or from an employer. You cannot be claimed as a depend of someone else. You must have a qualifying child, be between 25 and 65 years old and living in the U.S for at least six months out of a year.
You may be able to deduct some of your insurance expenses, even health insurance and business insurance. Speak with an experienced tax accountant about whether or not you’re eligible and what your limits are. You may also be able to deduct some of your Auto Insurance payments if you use your car for business purposes.
It’s important to have a knowledgeable Insurance Specialist get you the proper insurance products you need in the first place. To get multiple free quotes for Auto or Home Insurance call (888) 772-4247. Find out how you can save by bundling all your insurance products.
The information in this article was obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.