Simple Ways to Lower Your Tax Bill — Part 1
With tax time now upon us, you may be thinking about ways to lower your tax bill. Paying taxes is our duty as citizens, but even so, that doesn't necessarily mean you have to pay the full amount and say goodbye to huge chunks of your money. Here’s a look at several simple things you can do to lower your taxes—and avoid getting into hot water with the IRS:
Include Dependent Taxpayer Identification With Your Return
If you are claiming dependents on your tax return, make sure you include some type of official identification for them. Usually this means a Social Security number. If you fail to provide this information, you could lose out on the $3,900-per-dependent savings, as well as the $1,000 tax credit (as long as you’re in the right income bracket) you’ll get per child younger than 17 years old. If a lot of folks depend on you, that’s a good amount of potential tax savings.
Claim Your Tax Credits
There are a lot of official tax credits that you could potentially claim. While it might be simple to ignore some of them in order to streamline your return, you could be missing out on some substantial potential savings. Claim all of those credits, if you can!
As we’ve already discussed, a child tax credit is available for children under 17 years old. You can also get credit for the elderly and disabled, non-business energy property credits, home-buying credits, retirement-savings contribution credit … plus a heck of a lot more. Every bit you can take off with a tax credit will save you money in the long run.
Itemize Your Tax Deductions
If you’re feeling lazy and don’t want to itemize your tax deductions, think again. The deductible money you shell out during a job hunt, or for a business car can really add up—not to mention the more typical tax deductions available, like mortgage interest, non-cash charitable donations, points paid to refinance a home, and higher-education expenses. It’s well worth your time time to see if you qualify for more than the standard deductions. Your pocketbook will thank you later for the extra effort.