Save Money During Tax Time
Tax time is coming and no one if looking forward to pulling out the accountant and worrying whether or not they have everything they need. Most people are still trying to figure out ways that will help them instead of dreading the day when they find out how much they will have to pay back. We are in luck because there are a few ways that can help us to get at least $1,000 or more.
Too many people ignore all the little expenses that are related to producing income. This includes looking for a job, tools to be successful in your current job and even managing your money. What most people don’t know is that they don’t have to be in business to deduct some of the costs of living. These and other miscellaneous expenses do need to add up to 2% of your adjusted gross income, but it’s easier to get there than one would think.
The miscellaneous-expense deduction is a catchall for an array of tax-deductible expenses, including unreimbursed business expenses. These include everything from subscriptions to industry magazines to memberships to professional organizations. And if you or your spouse have been looking for a job, it will also include travel costs (gas, airfare). If you or your partner works from home, the computer, furniture, Internet and phone expenses may all be deductible.
Another thing that people don’t even to think to look for are tax breaks that are college-related. Remember college tax breaks can apply if you or your spouse is attending college or even just taking carpentry or cooking courses part-time. As an example, a family with a household income of $60,000 with a child in college and another in graduate school can pocket more than $3,000 a year with the Hope Credit (a per-student annual credit for the first two years of higher education), deducting interest paid on student loans and deducting tuition and fees for the graduate student.
The tax-advantaged college savings plans, known as 529 plans, can also boost your savings. With one of these accounts, you could earn $12,000 more in 15 years than you could in an equivalent taxable brokerage or mutual fund account (assuming 8% earnings per year with $2,000 in annual contributions). And remember, even if you’re getting hit with the alternative minimum tax, these are credits that, unlike many others, still apply.