Does anyone else get anxious when it comes to filing your taxes?
This year, tax day for those of us in Texas has been extended until June 15, 2021 due to the winter storms this past February. I’m using this extra time to get smart about filing my taxes. I found some helpful hints that you can use too.
Know your dough. There are a variety of tax credits available, so it pays (literally!) to know what you’re eligible for. The earned income tax credit could score your family a little more and if there’s a student in your household, don’t forget about the federal tax credit on tuition – it can be used by either the parent or the student.
Give a little, get a little. Have you ever donated anything? Make sure your inner do-gooder gets credit for helping others by saving all of your receipts for donations and charitable contributions. Even small amounts can add up and make a difference when it’s tax time.
Get ahead. Are you a single mom or single woman who cared for another dependent family member (such as a parent)? Filing as head of household can help you rack up a great tax break. To qualify for head of household status, you need to have paid more than 50% of all household expenses and support at least one dependent for at least six months out of the year.
Don’t double count. If you have a child who is filing a tax return, make sure they don’t claim themselves as a dependent if you are going to claim them as a dependent. If the IRS sees a social security number claimed twice, they’ll kick the returns back.
Invest in yourself. Didn’t stash as much as you wanted in your IRA during 2020? There’s still time to sneak it in! You have until the tax deadline to contribute to a tax-deductible individual retirement account and treat the payment as a 2020 deposit.
Find the right fit. That Goldilocks was on to something. If your annual tax outcome seems “too big” (a large refund) or “too small” (a big tax bill), your withholding is probably at fault. Talk with a tax professional to find out how you can adjust your withholding so that tax money works more efficiently for you.
Got questions? Get your worth on by visiting https://www.irs.gov for information and https://www.irs.gov/newsroom/tax-tips-for-march-2021 for more tips.