Taxes are part of almost everything we do in life. There are, however, ways to save on your taxes through life’s transitions.
Here are 12 tax tips to help you save through major life events:
Education
- Deduct your tuition. Education expenses may be tax deductible if they maintain or improve skills required in your employment.
- Invest in a 529 plan to save for your children’s education. You won’t get a tax deduction, but there won’t be a tax on the earnings and growth of those funds if they are used for education.
- Tally the cost of books and necessary supplies purchased for your education. Expenses directly related to your college education may be tax-deductible and may put more money back in your pocket.
The Working World
- Invest in 401(k)s and IRAs as soon as possible. Small contributions growing from an early age are more valuable than large contributions made years later.
- Learn about your company’s fringe benefits, such as tuition assistance plans, free employee counseling, mass transit commuting assistance, Health Savings Accounts, and other tax-free perks.
- Get next year’s refund now by adjusting your withholding so that you break even with the IRS at the end of the year. If you need help saving, have money automatically deposited to savings from each paycheck.
- Only borrow from your 401(k) in an emergency. The interest you pay on the loan won’t be tax deductible, and you will lose the capital appreciation you’d enjoy if you’d left it invested in the plan.
Family Life
- Put tax-free money into your employer’s dependent care plan. Though this will reduce your child and dependent care credit, it’s still a good financial move for most taxpayers.
- Claim the Child Tax Credit on your taxes. The Child Tax Credit is up to $2,000 for each dependent child under 17 and is available if your income is up to $200,000 single or head of household (up to $400,000 if you are married filing jointly) TurboTax will ask you questions about your dependents and give you the deductions and credits related to your dependents that you’re eligible for or you can fully hand your taxes over to a TurboTax Live tax expert who can do your taxes from start to finish.
- Gather your receipts for dependent care. You may be able to claim the Child and Dependent Care Credit even if you don’t work, if your spouse works and you are a full-time student or disabled. Don’t overlook expenses eligible for the Child and Dependent Care Credit such as nursery school, after school programs, and daycare.
- 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 is your best move. TurboTax helps you select the filing status that you are eligible for based on your entries.
- Take advantage of the Other Dependent Credit for non-child dependents. If you take care of a non-child dependent like a parent, grandparent or even a friend, you may be able to claim the Other Dependent Credit that is $500 per eligible dependent.
Don’t worry about knowing all of these tax rules. Don’t worry about knowing these tax rules. Meet with a TurboTax Full Service expert who can prepare, sign and file your taxes, so you can be 100% confident your taxes are done right. Start TurboTax Live Full Service today, in English or Spanish, and get your taxes done and off your mind.