Life transitions can feel like many things at once: exciting, emotional, confusing, hopeful and often expensive. On the bright side expensive life moments often bring big tax benefits.
Check out these 11 tax tips to help you save through major life events.
- Deduct your tuition. Education expenses may be tax deductible if they maintain or improve skills required in your employment.
- Tally the cost of books and supplies purchased for school. Expenses directly related to your college education may be tax deductible and may put more money back in your pocket.
- Learn about your company’s fringe benefits, such as tuition assistance plans, free employee counseling, mass transit commuting assistance, Medical Savings accounts and other tax-free perks.
- Start saving for your retirement now by investing in a 401(k) or IRA as soon as possible. Compounding interest means small contributions starting at an early age are more valuable than large contributions made years later.
Marriage & Children
- File jointly. Married couples filing separately are barred from many tax deductions and credits, so unless you are trying to distance yourself from a tax evading spouse or a soon-to-be-ex, a joint tax return may be your best move.
- Claim Child Tax Crediton your taxes. It is up to a $1,000 credit you may be able to claim for each of your dependent children under 17. For married couples with income more than $110,000 or $75,000 for a single parent, the credit phases out. TurboTax will ask you simple questions about your dependents and give you the tax deductions and credits related to your dependents that you’re eligible for.
Buying a Home
- Mortgage interest and property tax deductions will save you money on your taxes. If you have yet to purchase a home, keep in mind saving to buy a home is a great use of your money after you have contributed the maximum to tax-advantaged retirement plans.
- Deduct points paid on your home loan. Points paid when you acquire your home are deductible in that year, and points paid to refinance a loan must be written off over the length of the loan (1/30 each year on a 30 year loan). TurboTax will ask simple questions about your home loan and accurately calculate your tax deductions based on your entries.
Starting a Business
- Shift income to your child’s lower tax bracket by paying your children reasonable wages to help you with age-appropriate jobs in your business. Your child may be able to earn up to the standard deduction amount of $6,300 in 2015 without paying federal income taxes.
- Deduct an office in your home if you regularly and exclusively use part of your home to perform administrative or managerial activities for your business. You may be able to deduct a portion of utilities, rent or mortgage interest, depreciation, cleaning, and the like.
- Deduct the health insurance premiums you pay for your entire family. If you employ your spouse in your business, you may deduct the premium as an employee benefit.
TurboTax is here to help you turn these life transitions into tax savings. By asking simple questions about your life, TurboTax will help you effortlessly file your taxes and give you the tax deductions and credits you are eligible for.