This “Tips for maximizing tax deductions, refund / Lowering your tax payout” post is sponsored by Tax Act, but as always all opinions and thoughts are my own.
It’s one of the most dreaded times of year… TAX SEASON! Do you procrastinate or do you file as soon as those W-2s and 1099’s roll in? Tax season always has this dreaded stigma surrounding it and I’ll admit that I get anxiety when it comes to filing taxes. But why is that? The truth is that 3 out of 4 tax filers actually receive some type of refund. Why are we anxious about receiving money? (Unfortunately I’m not one of the lucky 3 haha) I think a lot of us fear the unknown, we don’t feel confident in ourselves enough to do it in fear of making a mistake. I’ve been filing my taxes for years and I’m here to tell you it’s not as bad as you think. Especially with a program like TaxAct that literally walks you through it all.
Whether you’re getting a refund or owe taxes you still wanna try to make sure you’re covering all bases possible to not miss out on hard-earned money. Since this is an area I struggle with myself, I’m delighted to partner with TaxAct to give some tips on maximizing your tax refund or lower your owed taxes. You can either claim the standard deduction or itemize your deductions depending on your situation. Clearly itemized is a bit more tricky but TaxAct and I have you covered. Before we start, I think this article on “5 Tax Reform Changes to Know Before Filing Your 2018 Tax Return” is important to read just you know what has changed!
Ok let’s rip off the band-aid.
What are some tips for maximizing tax deductions? I’ve been doing hours of research to figure this out myself. I highly suggest brushing up on a Tax deductions available but I’m gonna dive into some I think are pretty much vital.
Tips for Maximizing Tax Deductions:
Work Expenses if You’re Self-Employed.
What are some expenses you can file regarding work?
Mileage: I work from home so the majority of my time is spent there working but I do often have to drive to events, business meetings/lunches etc. Did you know you can deduct a lot of those expenses? I found this great resource regarding claiming car expenses on your taxes.
Business lunches/dinners: Ok you are still able to deduct this as a business expense with a few stipulations. You are allowed to deduct 50% of meal and beverage costs IF you are furnishing the meal to current or potential customers, consultants, business contacts etc.
Education Expenses: If you take a class or go back to school to advance your skills, you can deduct those costs on your taxes.
Speaking of…Do you work from home? Do you have a home office?
I solely work from home and didn’t even know I could claim my home as an office until last year. I think a lot of people are intimidated by this tax deduction because they simply don’t know how to use it. If you do qualify though, it’s worth it to offset costs and help maximize your tax refund or lower your payout. How does it work?
If you work from home and have a dedicated office space you can claim that on your taxes for a deduction. The IRS sees this as an expense you can claim if you use a room, barn, garage or office etc., and can write off expenses such as mortgage interest, utilities, repairs etc. The only catch is you need to figure out the percentage of the house devoted to the business and base the amount deductible off of that. You can find more information on the TaxAct website full of useful details.
Child Tax Credit.
Child Tax credit is probably the most important for us and I’d say a lot of parents out there. Let’s get real, raising children is one of our biggest expenses in our lives. I remember as a child my divorced parents discussing who planned on claiming my brother and I on their taxes. It is typically one of your biggest tax breaks. So what is the tax break? In 2018 it was changed to $2000 per qualifying child. The child in question does need to be under 17 at the end of the tax year (12/31/18) to claim it, the taxpayer claims the child as a dependent and also houses the child for at least half the year. So if you’re divorced, it’s typically the one that the child lives with more that claims the credit. (You both can’t qualify) Read more here.
More kid stuff.
The child tax credit isn’t the only break you get with children. You’re able to write off childcare/daycare for up to 35% of $3,000 of those expenses for one child under 13 or up to $6,000 if you have two or more kids under that age. You can file if you have a caregiver that you pay who is not the child’s parent but you do have to obtain their social security number when you file. Your child has to be under the age of 13 or physically/mentally unable to care for themselves.
You can also file an adoption tax credit if you adopted in that year regarding any expenses you incurred. You can qualify for up to $13,840. That’s huge for someone like myself who plans on adopting in our future. Adoptions are so expensive so this is so encouraging to those selfless individuals who want to expand their families.
Charity is a big one.
In addition to volunteering, we also donate every year and we would even if we didn’t get a deduction, but lucky for us we do! We donate to the Bridge Ministry, St Jude’s, Vanderbilt and the Arc every single year in addition to many smaller causes. In order to claim any donations you do have to have a record of receipt for those donations. You sometimes can deduct a charity item where you received a gift in return (ie. if you attend a charity auction and pay $10,000 for an item that is worth $5,000, you can deduct $5,000 as a charitable donation.)
I hope this information helped you feel more confident in filing your taxes this year. It really isn’t something to dread and you can complete it typically in no time. (More to come on that) Check out TaxAct (you can earn up to an extra $100!) to file them at home, in the comfort of your sweatpants at any hour. Please message me with any questions! Look for more tax information coming your way this tax season.
Valuable TaxAct Resources
- You can view a full list of deductions that are no longer acceptable here.
- Bloggers! Here are the top deductions of 2018!
- Tax File-in Preparation Checklist
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