Education can save you thousands of dollars every year when it comes to taxes. While many people opt to do their own taxes in order to save money, there are many times when they are simply not aware of all the advantages and savings that are available. If you do not have the help of a trained tax professional, or are one of the very few that enjoy doing their own taxes, then it is your responsibility to keep up to date on any new tax breaks or options that can save you money.
But, just in case you haven’t been paying attention to any breaking tax news, we have a list of top tips that could save you a large sum of money.
Credit for Going Green
There has been a lot of publicity this year in regards to the green tax initiatives that were created by the government this year. There are tax credits up to $1,500 for anyone that installed new air conditioning units, windows, or doors, or credit up to 30% for any consumers that installed solar energy or geothermal heating units. If you make the move to purchase a hybrid car, then you may also be able to receive credit for up to $3,400 depending on the type of car and brand you bought.
Credit for College Tuition
Enrolment for college is up approximately 15% all across the board as more and more people are heading back to school in order to find more job stability. This increase has meant an increase in credits available for students. One of the best credits is the Lifetime Learning Credit which offers $2,000 of credit for any tuition that is targeted towards improving job skills.
Thank your Health Plan for Savings
Nearly a quarter of Americans that pay into private health insurance have the ability to take advantage of a health savings account that isn’t taxed. These accounts can do wonders for those who are overall rather healthy and have had just a few medical bills recently. Anyone in this category that is under 65 can put away just under $8,000 this year that will not be counted towards earnings or tax.
Long-Term Care Insurance
Many Americans invest in long-term care insurance that can be used towards caregivers or the cost of nursing homes down the road. This insurance can end up being rather costly, but the premiums are actually deductible, as they are considered a medical expense. The maximum deduction is $1,190 and is available to those between the ages of 50 and 60, if their premiums are more than 7.5% of their income.
Using your IRA to Cut Taxes
One of the best ways to cut down on the tax you have to pay is to stock up on your IRA savings. Deductions can be filed all the way up until April 15th, and the maximum contribution per year is between $5,000 and $6,000 for anyone over the age of 50. However, if you have a 401(k) from your employer and make more than $65,000 then you cannot claim IRA deductions.
Tax time is stressful and is rarely rewarding, but understanding which credits apply to you and the many avenues you have to save money can save you thousands of dollars in the short and long term.