Tag: Tax deduction

Tax Credits And Deductions For Your Tax Return

Unfortunately, filing taxes could prove more difficult for taxpayers this tax year. Individuals have to worry about the requirements set forth by the Affordable Care Act (ACA). And Taxpayers will receive less support from the IRS thanks to scaled back support by phone. Plus, the deadline is fast approaching at the moment. But don’t get too nervous discovering your Tax Credits And Deductions.

turbotax

One thing to keep in mind is that sales tax is deductible in many cases, which is useful for residents of certain states. When a state doesn’t have an income tax, such a deduction can prove useful. Likewise, the same applies to states with lower income taxes. Congress thankfully extended this sales tax deduction in time for it to apply to a taxpayer’s 2014 tax return.

Insurance premiums from a mortgage are deductible for most Americans. For this deduction, taxpayers must meet two requirements. They must have taken the loan out since 2006, and they cannot earn more than $109,000 gross annually.

Tax Credits And Deductions
Tax Credits And Deductions

Anyone that’s 70.5 years-old or older can transfer up to $1000,00 from an IRA to a charity. In doing so, seniors get a major tax break. Taxes on Social Security are lowered. Seniors will even help themselves avoid the high-income surcharge through Medicare. If you have the extra to donate, you can get big help at this time from the IRS.

An extra 3.8% surcharge is placed on investments for high earners, and taxpayers should keep that in mind.

Of course, these tax credits and deductions apply only to a 2014 tax return. Congress never made these deductions permanent, which means they require approval each year. The political landscape is always changing, so renewal is not guaranteed. See if you can take advantage while they are on the books.

Teach Your Children About Taxes – Pre-teens & Young Kids

We finally get to wave good-bye to old man Winter and get ready to welcome in the Spring. One additional season that takes place around this time, is tax season. It is that time of year when everyone is busy gathering up information and organizing paperwork in anticipation of the April 30 deadline. I myself keep on top of taxes all year round by filing all my slips and receipts within a huge accordion file as I receive them. When March is at its end, I am ready for it! Having tools like TurboTax Canada makes preparing my return quite a painless, quick, and easy process.

turbotax

What I call an accordion may be a shoe-box to you, as long as it holds all your receipts and important documents. However, in a shoe-box they will all be piled up on top of one another and disorganized. Now you have to lay them out on the table and take the time to sift through them all and find what you need. The sorting can take a long time.

TurboTax Canada
Tax Credits Deadline 31 July (Photo credit: HM Revenue & Customs)

Teachable Moment:

The kids might notice that you are into something, and be curious. Why not grab this moment to teach them about taxes? Even though they are still too young to be income tax payers, they are never too young to learn. It will be a chance to give them a basic concept of the process. You can explain to them why taxes are collected, and that the government collects them. They can learn what our tax dollars are supposed to be doing, like building roads and bridges, giving us opportunities for doctor visits, public schools, and lots of things we use and need every day.

Let your children get involved and learn about life this next tax season. They are smarter than we give them credit for sometimes. Let them watch you use TurboTax Canada for your own taxes.

Tax Credits and Deductions

You can show your kids how interesting and how relevant taxes can be, simply by explaining to them, that some of what they do actually affects the lowering of your taxes. A good example would be if your kids were attending parochial school. Then you could be entitled to claim part of their tuition as being a charitable donation (you would need to get a receipt from the school for verification). There are also some extracurricular activities that can provide some savings on taxes as well. If the kids are involved in gymnastics or hockey or something, the you’ll be able to claim a ‘fitness amount’. If they happen to have signed up for guitar lessons, then you can claim that as a children’s art tax credit. Raising kids can be quite taxing, so they allow you to claim child tax credits for children under 18 (bad joke but true nonetheless).

Your kids might surprise you at how interested they are in learning about how you can claim deductions for their day camp, the babysitter, day care, the nanny, and more, can be deducted as ‘child care expense’. The max on this is $7,000 for children under age 7, and then $4,000 on children 7 and above, all the way to age 16. Children who are qualified for a disability tax credit can get as much as a $10,000 credit. With knowledge, organization, and a program like TurboTax Canada, they can have a much better experience than some of us who didn’t have such a good learning head start.

Related articles