It's tax time. And there's no time like the present to get your tax documents together and start your return.
With tax deductions and credits for education, dependent care, retirement and more, there's no reason to miss out on some smart, money-saving moves that can help you get a bigger tax refund.
1. Education Credits and Deductions- The U.S government provides incentives, in the form of education credits and deductions, to reduce your tax bill and help take the bite out of paying for a college education for you, your spouse, or children. There are several education tax credits and deductions that may be available to you:
2. Child and Dependent Care Credit- If you paid for child care, dependent care, or even summer camp so you could work, you may be eligible to deduct 20 percent to 35 percent of your qualifying expenses up to $3,000 for one qualifying individual and up to $6,000 for two or more qualifying individuals. A qualifying person is your dependent under the age of 13, however this credit is not only for the care of a dependent child. You may take this credit for care of your spouse, or certain other dependents that are mentally and physically incapable of self-care.
3. Maximize Your Retirement- What could be better? You can still make a contribution to your IRA in 2012 and reap the tax benefit when you file your 2011 taxes. You have until April 17, 2012 to contribute up to $5,000 plus an extra $1,000 if you are 50 or older, depending on your modified gross income. You can use an IRA calculator to see how much you should contribute to your IRA for the maximum tax benefit.
4. Saver's Credit- Often overlooked and seldom talked about, the Saver's Credit helps low to moderate-income filers save for retirement. The tax credit is worth up to $1,000 ($2,000 for married filing jointly) if you contribute to a qualifying retirement plan such as an IRA or a 401K. You may not have qualified for this tax credit in the past, but if you experienced a reduction in income, you may qualify. This tax credit is a win-win situation since contributions to your IRA will also be a deduction to income.
5. Teacher's Classroom Education Expense- Congress decided a few years ago to give teachers a temporary tax break with the Educator Expense Deduction. This tax deduction expired 12/31/2011, so if you are a teacher, instructor, councilor, principal or aide for grades K-12, 2011 is the last year you can benefit from an additional $250 of expenses for classroom supplies paid out of your own pocket. There are additional pluses to this tax deduction since you do not have to itemize your deductions to claim it. In addition, if you're a married couple who are both educators, you may reap the benefits of a $500 tax deduction.
6. Use Tax Resources- Don't forget do-it-yourself tax software available to guide you through the tax deductions and credits mentioned and more. In addition, there are free tax resources to help you with your tax questions so you can be confident your return is done right.
For these and more helpful tax tips that save you money go to the TurboTax Blog.
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Follow Lisa Greene-Lewis, CPA on Twitter: www.twitter.com/@TTaxLisa