I hear from people every week who think their tax problem is the end of the world. It usually isn't. I'm Darrin Mish. I've resolved over $100 million in tax debt for clients. Here's what you should know.
If you have just entered the workforce and are filing your taxes for the first (or first few) times, here are some friendly tips that can very well save you some money plus help you avoid the dreadful tax audit. Click here to read or watch more IRS Help resources.
- Claim education credits
Are you still pursuing your educational degree? You should claim credits available for student loan interest payments up to certain income limits. You can claim a deduction of up to $2,500 for student loan interest. There is also the American Opportunity Tax Credit that allows you to claim the first $2,000 of student expenses and then 25% of the next $2,000 for four years of college. Expenses include course-related books, supplies and even a computer if it is a requirement of your enrollment. In every case you should keep receipts of your purchases. To qualify for the American Opportunity Tax credit, you must be enrolled at least half time and pursuing a degree program.
- File electronically
It is advisable to file your tax returns electronically for speed, convenience and accuracy. You can access the relevant forms for your tax returns through the IRS website, www.irs.gov.
- Make your filing status consistent with your parents’
If you are working and still living with your parents, they may claim for dependent’s deduction on you. This will affect your filing status so you should make your status consistent with theirs. You can be considered their dependent if you are under 19 years of age or under 24 if you are still a full-time student. Even if you are working, you could be technically their dependent if you earn below a certain amount.
- Claim deductions for moving costs
If you have taken up a job in another location at least 50 miles away, you are entitled to claim deductions on the cost of moving your household items and travelling costs on the condition that you have worked in your new job for at least 39 weeks. What’s more, you do not have to itemize your claims.
- Newlyweds update your name in your Social Security records
If you recently married, you should not forget to update your Social Security with your new married name otherwise if you file your return under your married name and it does not tally with the name in your Social Security, it will raise a red flag with the IRS.
- New home owners, claim deductions on your mortgage
The mortgage on your home is often eligible for tax deduction. If you have made certain renovations such as energy-saving improvements, you may be entitled to even more claims. All you need to do is itemize your expenses and claim it.
- New parents, claim dependency on your children
If you are a new parent yourself, you are entitled to claim dependents’ care credit if you and your spouse both work. You can also claim for child tax credit up to a certain limit depending on your level of income.
If you wish to know more about how you can save on your taxes, call us at (813) 229-7100 for a free consultation.