Many of us are already feeling the stress as April 18th approaches. If you’re not an organized person, you’re probably thinking about all the receipts you need to gather together. But you might want to think about how to possibly change your filing status instead. Doing that may be the key to getting a larger tax 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.
Know Your Filing Status
Your filing status is important. It determines the amount of your tax 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 could also save you thousands. This is especially true 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 for networking, job training, and other such expenses, too. 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. From there you can make the right decision. You can even do the estimate on your own using TurboTax or a similar tax tool.
Head-of-Household Status Reductions
If you qualify for head-of-household status, you may be able to receive more tax write-offs. There are a few ways you can qualify for this status:
You could also qualify for the head-of-household status. This is an option if you take care of elderly parents and are considered unmarried for the tax year. You must have also paid more than half the cost of maintaining their housing, food, and Homeowners Insurance or Renters Insurance.
Another way to qualify for head-of-household status is if you are a widow(er) with a dependent child and your spouse died within the last two tax years. You will only qualify this way if you have also not remarried.
The last way to qualify for head-of-household status is if one or more children lived under your roof for more than six months. You also must have paid more than 50% of the cost of mortgage or rent, utilities, and Homeowners Insurance or Renters Insurance. These expenses may be deductible if you’re head-of-household status.
To qualify for the dependent care credit, your child must be under the age of 13, unable to care for him/herself and live 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.
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). This lowers your taxes and may result in a tax refund. To qualify, you must have a Social Security number and be a U.S. citizen, a year-long resident alien or a nonresident alien married to an American citizen or resident alien and filing together. Your income must be from self-employment or from an employer. You cannot be claimed as a dependent on someone else. You must also have a qualifying child between ages 25 and 65 years old and living in the U.S for at least six months out of a year.
Is My Insurance a Tax Deduction?
You may be able to deduct some of your insurance expenses, including 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 Homeowners Insurance call (855) 919-4247. 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.