WEST PALM BEACH, FL – It’s the time of year all of us dread, tax season. While we did get a short reprieve of a little over a month this year due to the pandemic, we are now just FIVE days away from the May 17th filing deadline. That’s why I put together some tips and tricks to help you maximize your return.
I know this past year has been hard on all of us. Most Americans had to find ways to supplement their income due to loss of hours or outright job loss. So, you need to make sure that you go through your receipts and determine what may be a legitimate business expense. Most people will immediately think of gas, mileage, etc. However, there are many more deductions for your business or side hustle that are accepted by the IRS. For example; website costs, digital media advertising, food costs during strategy sessions, paying for the internet as you work from home are just a few.
FLEXIBLE SPENDING ACCOUNTS
Another area that many have overlooked, Flexible Spending Accounts, or FSAs. These are great ways to save money, but remember that you must spend what you saved before filing. USE IT OR LOSE it.
Have you evaluated the most common tax credits to see if you qualify. It’s always good to have a basic understanding of these so you can make sure that you utilize them when filing or have a list ready when working with your tax professional. Are you a student? Then you might be eligible for the Lifetime Learning Credit. Are you a saver? Then you might qualify for a Saver’s Credit. Still an undergrad? Then you might qualify for the American Opportunity Tax Credit. Low to moderate income? Then you might qualify for the Earned Income Tax Credit. There are tons more tax credits or opportunities available, but these are some of the easiest to qualify for and most overlooked chances for you to reduce your tax burden.
Each year, thousands of taxpayers returns are rejected due to typos. Always have someone you trust (spouse, tax professional, etc.) be your second or even third set of eyes to make sure that your social security number and other basic information like this is filled out properly. Tax time is stressful and can lead to mistakes, especially when you are personally filing your own taxes. Don’t miss out on a quick return just because you didn’t dot the “i” or cross the proverbial “t”.
Medical expenses are deductible. You must spend more than 7.5% of your Adjusted Gross Income (AGI) on medical expenses and be able to itemize your deductions in order to possibly benefit from the tax break. For some people, that’s a lot of dough, but if you qualify, the tax deduction can be significant. So take a few minutes to consider your possible medical expense deduction before skipping ahead to the next potential write-off.
Our tax code is complicated and needs to be reformed. I hope these tips and tricks help you maximize your return and understand how to make the tax code work better for you. As always, I recommend you confer with a tax professional so that you don’t leave a dime on the table.