Filing tax return every year is moral duty of every citizen. However, paying a part of your hard earned money is hard for majority of people. So, every taxpayer looks out for alternates to as less tax as possible. There are number deductions and tax credits are provided by the IRS, you just need to make use of them and save lot of money. Tax deductions help in reducing the taxable amount. On the other hand, tax credits reduce the tax directly.
As a taxpayer, you can choose to itemize your deductions or opt for the standard deductions. If you’re not sure what to choose itemized or standard deductions go through the list of tax deductibles. Now compare the amounts of standard and itemized deductibles. If standard deduction is less than the other fill Form 1040 schedule A to get tax relief. If you want to increase your tax deductions, do some charity. Yes, charitable contributions to recognized organizations provide you handsome tax deduction.
Dental and medical expenses can also deduct large amount of tax if medical expenses exceed 7.5% for you, your spouse or other dependents. The deductions will be calculated on your gross income. Business expenses are included in itemized deductions. You can use several things to show business expense. Business use of your car or home, expenses included business travel or entertainment, employee business expenses and educational expenses are some of them. You can increase your retirement savings by contributing to an IRA.
You can tax credits fro several reasons. However, few of them apply to only some of taxpayers. Child care tax credit is one of the basic credits. This kind of tax credit is available to those who has hired a professional to look after their children that under the age of 13 years. Other requirement to get tax credit is that if you’re married your spouse should be a student or must be working. While mentioning the tax deductibles during tax filing it is mandatory to mention the name and social security number of the professional looking after the child. If name or SSN is missing tax deductible will be denied.
Tuition tax credit provides some exemption to students. Tuition credit can be classified into Lifetime Learning Credits and Hope Scholarship. In case, you are filing tax for high income the tax credit will get void automatically. Other tax credit is dependent child credit. If your dependent child is under 17 years of age, chances are quite bright to get tax credit. If you qualify for the credit, you’re eligible to get full credit as dependent child credit is a refundable credit. The dependent credit is guaranteed even if it exceeds the federal tax.
If you’re moving more than 50 miles from your current location because of your job or changing job; you can deduction of moving expenses from taxable amount. You are also eligible for the deduction if your home is built on a leased land as rent payments can be deducted. You can use these tax credits and deductions to save your hard earned money.