As a taxpayer, you need to be aware of what deductions you can legally claim in order to lower your taxable income and increase your odds of getting back a refund. If you want to receive thousands of dollars from the government, you want to try and qualify for something called the Earned Income Credit or EIC (also called the Earned Income Tax Credit or EITC). The credit ranges from $420 to $4,710, which can be refunded if you owe less then the credit. There are many tax write-offs that will qualify you, which were set up for the express purpose of helping anyone. Below is a list of seven:
Here's How You Qualify:
- If you have more than one qualifying child, and you earned less than $37,783 ($39,783 if married filing jointly), you can qualify for as much as $4,710 of EIC.
- If you have one qualifying child, and you earned less than $33,241 ($35,241 if married filing jointly), you can qualify for as much as $2,850 of EIC.
- You do NOT have a qualifying child, and you earned less than $12,590 ($14,590 if married filing jointly), you can qualify for as much as $420 of EIC.
If you would like to know if you might be close, go the IRS's website and play with the numbers.
TAX DEDUCTIONS
Now that you have an idea, check out how much you reduce your income with the following tax deductions.
- Standard Mileage: (My favorite) Any mileage you drive in relation to business, medical, moving or charitable events, reduces your income accordingly.
- $0.505 per business-related mile ($505 for every 1,000 miles)
- $0.19 per medical/moving-related mile ($190 for every 1,000 miles)
- $0.14 per charity-related mile ($140 for every 1,000 miles).
(Even better, most mortgage companies do not consider it a valid expense when calculating your income for a home loan, so you can use this expense and still qualify for a decent mortgage.)
- IRA or Qualified Tuition Program (Plan 529 or Coverdell ESA): Until April 15th, you can deposit any amount into an IRA and reduce your income for the previous year (up to $5,000 per person for an IRA and $2,000 for a Qualified Tuition Program).
- Alimony Paid: Any amount that was ordered by a court order.
- Moving Expenses: All expenses of possessions, travel and lodging (for you and your family) if you moved more then 50 miles for a job or business.
- Student Loan Interest Deduction: A maximum of $2,500 of interest on a qualified student loan per return.
- Qualified Higher-Education Expenses: All attendance costs used for attending a qualified eligible educational institution (including tuition, fees, room and board, and an allowance for necessary expenses)
- Home Mortgage Interest: You can deduct all of your mortgage interest in a home that you live in, and even for a second home.
