Tips To Reduce Your Tax Bill
It is important to start organizing your finances as an individual, couple or family. You should start by organizing your taxes. One of the most beneficial tax benefits that are available is having dependents. This makes a lot of tax deductions available and several credits that you can avail yo reduce your overall tax bill. Each qualified dependent that you claim can decrease your income which is taxable by $3,900 for 2013.
Following are some strategies to help you maximize your tax refund:-
Qualifications for a dependent: Almost all the people are aware that one can claim an exemption of dependency for their children on their tax returns. This is not all, many people do not know that they might be eligible to claim exemptions for their other loved ones including but not limited to other relatives, grandparents, and even a boyfriend/girlfriend that they have been supporting. That person must go through a few qualifying tests such as the qualifying child, qualifying relative tests citizen/resident test, joint return test, dependent taxpayer test to name a few. This is to ascertain whether a loved one qualifies as a dependent, or not.
Recently married: If you are legally married on December 31, then you are considered married for the entire year and you must file yourself as either married filing separately or married filing jointly.
Married couples that file jointly get benefits in terms of lower tax rates being charged on their combined income amount. Whereas if you use the status of married filing separately, then you become ineligible for various tax deductions that are valuable and also credits related to your children. In this case, if you are actually married then you must file yourself as married filing jointly if you want to benefit from these credits and deductions.
The Earned Income Tax Credit is one of the above mentioned valuable tax credits(worth upto $6044) for the year 2013. Your Earned Income Tax Credit will be determined by the number of qualifying children and your personal income. The maximum credit that can be availed by you is $6,044 with 3 or more children who qualify, $5,372 with 2 qualifying children, and $3,250 with a single qualifying child and $487 depending on your income in case you have no children.
New additions: You and your family are now eligible for new revised tax deductions that have been overlooked previously. Your child indicates a deduction of $3,900 for the last year, which is another exemption. The Child Tax Credit is worth for an amount upto $1,000 for every child (eligible only for children under 17 years of age) is one more possible tax benefit.
Getting married and having a new child in the family are both monumental events in a person’s life. There are some financial benefits that you can avail of during these events which would help you offset some of the costs that you beared at these events. Its is important that these tax benefits are remembered at the right time.