Taxes can be a burden to any family that is struggling to make ends meet. If you file your own taxes, you may not be aware of deductions and credits that are available to you to help save you money. Sometimes getting the most money back on your taxes or paying the least amount is simply a matter of researching and better understanding the credits that are available to your specific family. The following are some of the most commonly used deductions and credits.
Child Tax Credit
You are able to deduct a certain amount off your total taxable income for each child that you claim as a dependent. The amount ranges from five hundred to one thousand dollars, depending on the IRS policy at the time. This is a credit that comes back to you 100% – for each child you claim, you will receive the total deduction toward your refund or off the total you owe the IRS.
Any money or goods that you donate to charity are also tax deductible. If you regularly donate old clothing or furniture to Goodwill or the Salvation Army, make sure to ask for a receipt in order to write those costs off on your taxes. Cash contributions to charity are also eligible for a tax write-off at a certain percentage. Make sure to document all the money and goods you give to charity to ensure that you take all the credits you deserve.
If money you spend toward the prevention, diagnosis or treatment of a physical or mental illness exceeds more than 7.5 percent of your Adjusted Gross Income, you may receive a tax credit. If you are subjected to the Alternative Minimum Tax, this number changes to ten percent. Once your medical expenses have exceeded those amounts, they can then be deducted off your taxes if you itemize your deductions.
Child Care Deductions
If you pay for child care for a dependent under the age of twelve, and the day care provider is a qualifying provider, you may qualify for a tax credit of up to 35% of the total you spend each year on child care. For families with two working parents, this deduction is essential to keeping the tax bill low. The child must be a dependent and must not be able to care for him or herself while you are at work.
Don’t Get Caught Paying More
These tax credits and deductions have been made available to all families in order to lessen the tax burden on the average American family. Take advantage of each of them to make sure that you are minimizing your total tax cost each year.
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LBS Tax and Jon Stiles have joined forces to help the Phoenix area get the maximum returns on their taxes this year.