The personal exemption is only a deduction that reduces the taxable income and doesn’t have the same net effect. The credit is between 20 and 35 percent of the amount paid for child care expenses, as long as the children are up to age 13,” Poulos explained.
Airlines Fees or Tips
If you’re self-employed and need to travel for business reasons, you could receive extra deductions on things like luggage fees or tips for airline employees, Poulos said. This, along with with other expenses like airfare and hotel costs can also be accounted as tax-deductible travel expenses, Poulos explained, so it is important for those who are self-employed to keep an organized record of proof of these fees in case the IRS decides to do an investigation.
Changes to Relationship Status
Marriage or divorce can greatly affect your tax returns, Mark Steber, chief tax officer at Jackson Hewitt, said.
“We see a lot of people miss credits and deductions related to life changes. For example, some clients get divorced and don’t realize you can file Head of Household instead of Single, with better deductions and a lower tax rate schedule,” Hewitt noted.
Certain Income Levels
Individuals may not need to file a tax return, depending on how much income one is receiving. However, before you decide on saving yourself from the trouble of filing taxes, keep in mind that you could qualify for a return. “One big miss is from individuals who don’t file,” Steber said. “Under specific income levels, taxpayers are not required to file taxes. However, these folks may qualify for large credits that are available, like the Earned Income Tax Credit, which can be up to $6,242. Unfortunately nearly 1 in 5 people who qualify fails to claim it, many from not filing their taxes.”
Getting Professional Assistance for Tax Preperation
Although it could be pricey to pay accountants to help deal with your finance – like preparing to file and pay your taxes – it is an expense that many don’t realize will mostly pay for itself in the future. Accounting fees are usually part of an individual’s annual deductions.
“Many individuals don’t realize that the cost of preparing your taxes can be claimed if you itemize your deductions. This means that having a professional tax preparer find all of your eligible credits and deductions could actually lower your tax bill. Consider that one missed credit or deduction could more than cover the cost of having your taxes completed by a tax professional,” Steber disclosed.
Featured Image: facebook
