Benjamin Franklin is credited with saying that the only two certainties in this world are death and taxes. Well, we’ll spend time later looking at ways to increase your lifespan. For now, let’s focus on the other side of the equation by revealing 5 smart and safe ways to cut your tax bill at efile time this year.
1. Take advantage of the earned income tax credit.
The earned income tax credit is a refundable tax credit for moderate-to-low working individuals and couples — especially those with kids. In 2018, the maximum credit for families with one child was $3,461, and $6,431 for families with three or more children.
2. Start a business.
If you’ve been thinking of turning a hobby into a part or full-time business, then doing so could help you ease your annual tax burden. Be careful here, though. The IRS is on the lookout for people who aren’t truly trying to run a business, but instead are trying to game the tax system. Get expert advice, and keep everything organized, right down to receipts for paper clips and staples.
3. Stay married.
You’ve heard the notion of “staying together for the sake of the kids”, right? Well, it sounds a bit crude, but you may want to stay married for the sake of tax deductions and credits — because couples have advantages that single filers don’t; especially if they have kids.
And even if you don’t significantly reduce your tax bill, the fact remains that divorce is one of the biggest reasons why people hit the financial skids — and many end up having to declare bankruptcy. By the way, if you are being hounded by angry creditors, then learn all about bankruptcy-related issues by checking out the blog by bankruptcy attorney Charles Huber at https://charleshuberlaw.com.
4. Claim the costs of finding a new job.
Job hunting can be expensive. For example, there are travel expenses, resume preparation costs, printing costs, and so on. If you’ve been job hunting and your expenses are at least 2% of your annual income, then you may be able to claim the amount over 2%. Keep in mind, however, that you must have looked for a job in your field.
5. Go back to school.
What if you went to school in order to change careers? If your income for the tax year in question doesn’t exceed $65,000 (single filer) or $131,000 (joint filer), then you may be entitled to save up to $2,000 on your tax bill thanks to the e Lifetime Learning Credit.
The Bottom Line
Calvin Coolidge, the 30th President of the U.S., declared that “collecting more taxes than is absolutely necessary is legalized robbery.” The smart and safe tax tips above will help you pay the requisite amount and nothing more — so that you can avoid getting fleeced by Uncle Sam and his relatives at the state and local level!