It is essential that you have goals in mind and strategies in place to increase your chances of obtaining a refund and reducing your tax bill.
The best approach is to develop a game plan going forward to ensure that, for the 2011 tax filing year, you will have thought about how to plan meaningful activities that will generate deductions, credits and exemptions to eliminate any tax liability, according to projections by the Tax Policy Center, a Washington research organization.
Most income tax payers look at their total gross pay, compare it with their actual net take-home pay and, then, become disappointed at the disparity. However, there are several starter strategies to consider before the April 15, 2011, tax filing deadline that may be useful to your circumstances and that may qualify you for a tax refund. Ideally, to become like the approximately 53 percent who will receive income tax refunds for the 2010 year, consider with your tax adviser or accountant the following savvy tax strategies adopted by others:
- If you are married, file “married filing jointly” for the maximum return instead of “married filing separately.” Any deviation from this further complicates your tax consequences and causes the deduction to dwindle instead of increase.
- If you or your dependent decide to enroll in school you are eligible to take the qualified tuition and related expenses that you pay for yourself, your spouse or dependent(s).
- If you have children and they are enrolled in a licensed day care center with an employer identification number, you must meet several tests which may qualify you to be eligible for the child and dependent care tax credit.
- If you need to go back to school to refresh your knowledge or obtain continuing or professional education credits, now might be the time to plan to incorporate this into your program as a tax strategy to receive the Hope or Lifetime Learning Credits.
- If you have parents that you are caring for whether they live with you or not, you may be positioned to deduct all expenses associated with their care.
These are just a few of the many tax strategies that are valuable options for you to consider. It would be wise to take a class, consult a qualified tax professional or visit the IRS website for more information.
Valerie Samuel is a business and finance expert and author with more than 20 years experience in business development and banking. She offers a variety of management services to corporations, universities, not-for-profits and individuals, including individual and group coaching. Email your questions or participate in this forum by submitting inquiries to [email protected] Call (212) 292-5127 or visit her website, www.valeriesamuel.com, for more information.