This is a great time of year for many of our customers.
The anticipation of a Tax Refund brings with it the promise of getting out of some debt and paying a few bills. We like to see our people smiling about such things. To that end, we are passing on some things from the nice people at TaxAct. They have provided the content below as a list of valuable information to maximize your return from the IRS.
The credits and deductions you select make all the difference in your Tax Refund.
Use a professional tax preparer that understands the proper code interpretation for the best results.
Child and Dependent Care Credit –
The maximum amount of child and dependent care expenses eligible for the credit for one child is now $3,000. It is $6,000 if you have two or more children. These increased amounts are permanent.
Child Tax Credit –
The credit has been made permanent at $1,000 per child under the age of 17 at the end of 2013. This credit may be claimed in addition to the Child and Dependent Care Credit.
Tuition and fees deduction –
You may be able to deduct tuition expenses as an adjustment to income if you, your spouse or your dependent are enrolled in a post-secondary institution. This applies even if you don’t itemize deductions. People generally take this deduction if you don’t qualify for an education credit or other tax break for the same expenses.
American Opportunity Credit –
The maximum tax refund credit for the first four years of post-secondary education costs in a degree or certificate program is $2,500 per student. Costs may include tuition, fees and course materials (books). If you don’t owe any tax, you may also be eligible to receive up to 40 percent of the credit ($1,000) as a refund.
Educator expenses deduction –
Elementary and secondary educators can deduct up to $250 toward their tax refund for related job expenses as an adjustment to income, even if not itemizing deductions. Educator expenses are not reduced by 2 percent of your adjusted gross income, unlike most employee expenses.
Deduction for mortgage insurance premiums –
If you pay mortgage insurance premiums, also known as PMI, you may be able to deduct premiums as mortgage interest.
Alternative Minimum Tax –
The AMT was created to ensure wealthy taxpayers receiving large tax benefits pay some tax. It will now be adjusted for inflation each year so fewer taxpayers are subject to the tax. The exemption amount rose in 2016 to $53,900 ($83,800, for married couples filing jointly). For married individuals filing separately, the exemption is $41,900.
Adoption credit –
There is a credit equal to up to $13,460 of your adoption expenses. This includes fees, court costs, attorney fees, traveling expense and other expenses. These are directly related to, and for the principal purpose of, the legal adoption of an eligible child. You may also be able to exclude up to the same amount from your income if your employer provides adoption benefits. Both a credit and exclusion may be claimed for the same adoption, but not for the same expense.
State and local sales tax deduction –
You can still deduct state and local sales taxes for 2016. Use the deduction for state or federal income tax – but not both.
Certain criteria must be net in order to claim them on your tax return. And even if you are eligible, you may not qualify for the entire amount.
Online and mobile consumer tax preparation programs make it easy to confidently claim deductions and credits. As you answer simple questions, the program completes your tax forms and checks for errors and potential opportunities. One of the top solutions, TaxAct, even helps you plan for next year. This includes guidance for the implications of the Affordable Care Act.