Claiming Tax Credits and Deductions
Year after year many tax payers miss out on credits and deductions that they actually qualify for. This is for a number of reasons. Usually it’s because people don’t make an effort to look information up on their own time. Often enough people weren’t told where or how to research income tax information.
Do I qualify for Deductions and Credits?
The first thing you should know is that there is going to be a major difference concerning which credits and deductions you can claim depending on whether you take the standard deduction or file an itemized tax return. You’ll see rules like not being able to file for certain breaks if you file as married filing separately and many other limitations. You’ll see a lot of phase-outs which just mean that if you make over a certain amount of money each year then you won’t be entitled to the full amount of the tax break.
Many of the best tax deductions pertain to financial situations involving home ownership and business expenses. Due to the hugely advantageous nature of many tax deductions the IRS requires that you have excellent legal proof of the situations that you wish to claim. Planning in advance is often the only way to claim the best deductions. For many people taking the standard deduction instead of an itemized deduction still makes sense financially so don’t lament if your situation doesn’t demand itemizing like the big boys do.
One of the most popular tax credits is the child tax credit. That alongside the earned income credit and college tax credits represent some of the integral tax breaks that exist to help moderate-income families. There are rules and phase-outs like the deductions but you don’t have to have an itemized tax return in order to receive most tax credits. Some tax credits are even refundable which means if you owe zero in taxes then you might actually get money back.
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