Winter brings all kinds of woes: bad weather, bad roads, the flu, and tax season. It’s time to gather receipts and prepare your 2017 tax return. It’s a time of mixed emotions. Will you owe the IRS? Or will your refund send you to Cancun for spring break? United Financial Credit Union offers financial services to help make the most of your tax return.
Top Two Tips
Tip one: Look for every deduction you can take. Deductions reduce your taxable income, reducing your tax liability. Checking for these deductions could help you make the most of your 2017 tax return.
- Consider your filing status. Has it changed since last year?
Even if your filing status hasn’t changed, couples should always consider whether to file jointly or separately. Turbo Tax makes it easy for you. It can do the calculations and tell you which status is better for your 2017 tax return.
Singles might qualify for head of household for reasons other than parenthood. If you provided a place for a friend or relative to live, you might qualify for this filing status. You had to have paid the lion’s share of housing costs, your friend’s income must have been under $4,000 and had to have lived with you for the entire year. It could be worth checking out.
- Consider every deduction. It’s easy to take the standard deduction, but there’s nothing standard about you! Of course, taking the standard deduction reduces your taxable income, but you could possibly deduct more from your income by itemizing, depending upon your circumstances.
Charitable giving is probably everyone’s first thought when itemizing. Of course, this means you need receipts to back up your claims.
You can also deduct job search expenses. If you moved over 50 miles to start a new fulltime job, your relocation expenses could be deductible.
There are plenty of other deductions. If you don’t know what’s allowable, using Turbo Tax can help you. It prompts questions for you, so you don’t miss any deductions for which you qualify.
Tip two: Credits give you a dollar for dollar advantage. Here’s your opportunity to whittle down your taxes and perhaps even enhance your refund.
- Earned Income Credit.
Roughly only one in five taxpayers who are eligible claim this credit. Are you one of the four who isn’t taking advantage of it? It’s not difficult to determine whether you qualify. It’s income based and the credit reflects the number in the household, including singles.
- Education Credits.
If you have a student in college, you might be able to take the American Opportunity Tax Credit. If you’re in graduate school, you should check into the Lifetime Learning Credit. College is costly, so it’s worthwhile to find out if you qualify.
Be sure to check every credit available on your 2017 return. Credits come and go with changes in the tax code. Ignorance could cost you money.
Bonus Tips: What to do with your refund
Deductions and credits aren’t the only way to make the most of your 2017 tax return. It also pays to file early. Why let Uncle Sam keep your refund until April when it could be in your hands? Here are some ways to make the most of your refund.
It might not qualify as fun, but using your refund to pay down or pay off high-interest credit card debt not only gets you out from under debt sooner but can also improve your credit rating. You’ll sleep better at night, too!
Or use your refund to start that emergency fund account you’ve been meaning to open. The refund you save today could mean not having to borrow money for an emergency later.
Another smart move to make with your refund is to consult a financial advisor or planner. Small changes in your spending and saving habits can more than pay for the advice. If you still balk at the cost, come talk to a United Financial advisor. We’re here to help all year long, not just during tax season.
No Looming Deadline
So what are you waiting for? You don’t need to worry about taxes. If you have questions, United Financial has answers. If you need tax software for your personal or business taxes, you can access it here. And use our 2017 tax return tips to get a head start on 2018!
When April 17th arrives, you won’t be among the many panicked Americans trying to beat the midnight deadline to file their 2017 tax return. Kudos to you!