Besides earning less money — which possibly isn’t the best solution — there are a number of ways that you can lower your tax bill by claiming the credits and deductions that you deserve. Knowing what you can claim for or write off throughout the year will help you to trim your tax bill and lower your financial obligation to Uncle Sam.
If you are a working parent who is currently paying costs towards the care of your dependents, this applies. You could claim credit up to the value of $3,000. These credits apply to children who are registered as disabled. Additionally, they apply to anyone who will be under 13 years of age at the end of the year.
Going green offers many benefits for the environment, but it can benefit your wallet, too! If you have carried out specific home improvements that make your property more energy efficient you could be in for a credit payout. These credits are currently available for the installation of residential solar panels, wind turbines, and geothermal energy. Credits could be worth up to 30% of the cost of installation, with no upper limit.
Student loans can be a burden long after you have graduated. But did you know that you can claim a deduction? You could deduct up to $2,500 in interest if you are single and earning less than $60,000. If you are filing in joint names you can deduct the same amount each. That is, if your joint modified adjusted gross income is less than $120,000.
Altruism can really pay off throughout the year. The IRS recognizes generosity by allowing all donations to charity to be written off. You will need to keep accurate documented evidence of any charitable gifts or donations in order to write this expenditure off.
Relocating can be expensive. There are traveling costs to take into account, temporary lodging expenses until you find a permanent place to stay and the cost of moving supplies and services to think about. The good news is that if you have incurred relocation expenses within a year of starting a new job and the relocation is over 50 miles away, you can deduct travel, lodging and move costs from your next tax bill.
These are just some of the deductions and credits you could be entitled to. By keeping up to date with the latest tax legislation and noting any changes in your circumstances, you could make significant savings on your tax bill each year.