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TAX credits consumers MUST know

 

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February has Valentine’s Day, March has Easter and St. Patrick’s day and April Showers might bring May Flowers. Sadly there is one season that continues to “rain on our parade,” and that, of course, is TAX season. BLAH!

Taxes always stress us out. I pay taxes quarterly for my blog, and we pay taxes at tax time for our jobs. We do everything “by the book” and pay a tax specialist to make sure we don’t miss anything including tax credits, many of which a lot of consumers are not aware of.

There are so many things consumers don’t know about when filing taxes. Ash Exantus, Financial Empowerment Coach of BankMobile- America’s first free mobile bank is here to help. Below please find Ash’s 10 most important tax credits that consumers should know when filing taxes.

Earned Income Tax Credit: One of the most lucrative tax credit that people should be aware of. It is available to working people with low to moderate income and can be worth almost $7,000.

The Child and Dependent Care Credit: This is an important credit for those who want to deduct cost associated with qualified child care or caring for a parent.

The American Opportunity Tax Credit: Gives students of higher education a credit for tuition, any mandatory enrollment fees and course material during the first four years.

The Lifetime Learning Credit: This allows you to earn up to $2,000 for mandatory enrollment fees and tuition for eligible educational institutions if you meet certain income guidelines ($65,000 or less if single, $130,000 or less for married couples filing jointly).

Premium Tax Credit: If you have health insurance from the health insurance marketplace then you may qualify for a credit.

Savers Credit: Allows those who are low and moderate income workers receive a credit to help save toward retirement.

Health Coverage Tax Credit: This credit pays 72.5% of qualified health insurance premiums for those individual and families that qualify.

Mortgage Interest Credit: Allows some owners to deduct a portion of mortgage interest paid to the bank.

Child Tax Credit: This gives a tax credit of up to $1,000 per qualifying child.

Credit for the Elderly or the Disabled: Gives those 65 or older or any permanently disabled retired person a tax credit that can be worth up to $7,500.

We were aware of some of these, but not all of them.

Sadly, we are losing one Child Tax Credit now that our daughter is 18 years old.

I would suggest you speak to your tax person about these tax credits and whether or not you quality for them.

Money

Kimberly

*I was not compensated for this post. I posted this for the benefit of my site readers. 

Important Tax Prep Tips to Consider

 

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Earlier this week my husband did something that we’ve never had to do before in our 16+ years of marriage – pay taxes. We never, ever owe anything. We always get back $3,000 – $4,000 each year. We use that money towards home improvements, back-t0-school shopping, doing fun things over the Summer, holiday shopping and whatever is left over we put into savings. This year however we’re not getting back a dime. Instead we owed money – and a lot of it!

We were foolish with the money I made. Instead of putting aside at least 30% we spent it. It’s not like we spent it on foolish things. The money went towards vet bills, car repairs, holiday shopping, back to school shopping and miscellaneous other things. I think my most frivolous splurges were scented hand soaps from Bed, Bath & Beyond and my favorite shampoo that you can only buy from a salon. We weren’t “crazy” with the money.

To be honest I didn’t make that much, so we figured combined with my husband’s income it would off set everything and we would just end up with less of a return. We NEVER expected to owe – a lot.

Lesson learned the HARD WAY!

My tip for you – if you make $$$ where the taxes are not automatically taken out you MUST put aside 25% – 30% to cover taxes.

I went to my bank to open up another savings account for the tax money. I learned it was cheaper to open up an e-checking account. In order to have a savings account I’d have to keep a minimum of $500 in there at all times to avoid fees and penalties. With an e-checking account there is no minimum and no fees. Since it’s an e-checking account there is also no paper statements (which is better for our environment). So I opened up one specifically for taxes. Now once a month a add up how much I made and take 30% of that amount and put it in the e-checking account. In fact I put a little more into that account. That way I have a bit more just in case. Come tax time if there is anything left over we can use it on something fun for our family.

Our friends over at Master Lock has some additional tips you might want to consider. It might be too late for some of these for this tax season, however you can always print them out and hold on to these tips for next year.

FYI… this tips were provided to me and I was not compensated for sharing them with you. 🙂

1. Request electronic copies of your tax forms. Many employers offer employees the option to receive their W-2 forms electronically, instead of by mail. By eliminating the risk of postal delays or missed deliveries, this ensures that your W-2 will be delivered securely as soon as it is available. Plus, faster W-2s can mean faster tax returns.

2. Securely store documents online. Avoid the mess of a mound of paperwork by storing – and organizing – all of your tax-related documents online. By utilizing a free, secure service such as the Master Lock Vault (www.masterlockvault.com) you’ll have easy access to all of your files wherever you are and help ensure that none of your paper documents will ever be lost, misplaced, stolen or damaged. Not only can you upload PDF forms, but you can upload photos from your phone of important receipts and expenses for your records. All data is instantly synchronized between the website and the App.  Bonus: securely store log-in information for your bank accounts and tax filing site in the Vault so you’ll never have to worry about forgetting your user name or password.

3. Think taxes year-round. Don’t wait until you’re ready to file your taxes to start collecting and organizing the supporting documents you’ll need to complete your return. Avoid the scramble by capturing and uploading a digital image of your receipt each time you pay the babysitter or have a tax deductible transaction, fill a prescription at the pharmacy, or make a charitable contribution such as dropping off a clothing donation to your local thrift store.

4. Opt for direct deposit. If you’ve done everything else online, why request a hard-copy check when it comes time to claim your refund? When combined with electronic filing, direct deposit is the fastest way to get your refund. If you’re on the other side of the spectrum and find that you owe taxes, opt to pay online and you can avoid the long tax-season lines at the post office. 

5. Call for help. Sometimes, outside advice is necessary, and you can now get the help you need without leaving home. Based on the complexity of your question, there are a variety of resources to turn to. For example, the IRS offers a toll-free hot line for tax questions during weekdays. Several tax-prep software providers also offer guidance via online forums or on their social media feeds.

In addition to these helpful tips I thought readers might be interested in the Master Lock “Tax Relief Rewards” Sweepstakes.

An added bonus of utilizing the Master Lock Vault to organize the tax filing process this year is the chance to win $1,000 to supplement your tax refund, or help ease the burden of additional taxes owed. To enter, new users can register for a Vault account at www.masterlock.com/tax_relief or www.MasterLockVault.com. Once the account has been activated, users will receive an email containing the sweepstakes entry form. Existing Vault users who have opted in for brand communications will receive an email with the sweepstakes entry form once the sweepstakes kicks off March 11. One entry will be accepted per person through April 16, when the sweepstakes closes and five winners will be drawn at random.

Here is a little more information about Master Lock Vault.

Benefits of the Vault extend well beyond the tax season. Use the system year-round, via the website or by installing one of the free mobile apps for your Apple®, Android®, Kindle® or Nook® devices.  Securely store and organize lock combinations, digital copies of your passport and social security card and other confidential data such as debit or PIN card numbers or online credit card account log-in information. Offering a high level of online security, the Vault serves as a digital safe deposit box for quick and easy access to valuable information anytime, anywhere.

How did you make out this year with your taxes? Are you expecting a hefty return (LUCKY! :-)!) or are you like us and have to pay? Do you have any valuable tax tips or lessons learned that you would like to share? Feel free to comment and let me know.

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Kimberly

*I was not compensated for this post. I posted these tips and information for the benefit of my site readers. Any opinions expressed are my own and not influenced in any way.