It’s tax season, which, depending on how many allowances you put on your tax information, might be one of the best times of the year, or the worst times of the year. Whether you’re using TurboTax or an accountant, there’s always the smidgeon of fear that you’ll end up owing the government, rather than them owing you. In order to lessen the likelihood of that possibility, there’re a variety of things you can do throughout the tax year that could help you write-off a little more and add more of a buffer between you and what you might end up owing. So what are the best tax write-offs for you to start taking advantage of so you can cash-in rather than cash-out next year? Let’s take a look.
Look to Charity
If you’ve managed to give last year to the less fortunate, or you’re planning on doing so this year, keep track of your contribution. Even if it’s just small stuff, like buying the cookies for your board meeting, or donating a little bit to the library, it’s still worth using as a bit of a write-off later on. Those all add up quickly. For example, if you drove your car for charity, you can write-off 14 cents per mile. The little things sometimes make the biggest impact on your taxes, so be sure to keep good records of every dollar that goes in and out of your bank account.
Dependant Care and Children
You may not know it, but tax credits can be hefty weights off of your total taxes owed at the end of the year. That’s why they’re not very easy to get a hold of. One of the main ways you can access a tax credit, however, is via child and dependent care credits. A deductible simply reduces your amount of taxable income, which overall reduces that amount of money you’ll end up paying for taxes at the end of the year. A tax credit reduces the amount of taxes you pay dollar-for-dollar, so it’s important to take advantage of this caveat if you can. Up to $6,000 of care credit can be used to qualify for. The credit percentage, which is usually around 20%, would go up if you’re a lower income household. This is designed to relieve the expense of child care, and can often result in a pretty remarkable tax credit.
Student Loan Interest
If you’re a student, and not registered as a dependant, you could qualify for up to a $2500 deduction on your taxes this year. This is due to a recent change in tax law that allows one party to take a deduction from a student loan, regardless of who pays back the student loan. It used to be that both parties involved with the loan, often a parent and a child, would have to both provide evidence that both had paid back the loan in order to qualify for the tax deduction. Now, even if someone else paid back the loan, the IRS sees it as if you gave the money initially, and the money was paid back period, regardless of who did it. Thus, you could get a deduction for money you potentially didn’t pay on a loan.
Invest Smart, Avoid Capital Gains
Capital gains taxes might as well be the opposite of a deduction. They can be hefty enough to cancel out even the most clever tax strategies and end up costing you more than you made at times on certain types of investment properties. However, there are a few ways to honestly avoid capital gains and one of the most popular is a DTS investment. There are a variety of benefits to take advantage of via a DTS investment, and one of the major ones is the low maintenance way you can bypass capital gains. Other benefits include being able to afford investment properties outside of your financial means, not having to worry about property management issues on your own, and easily diversifying your portfolio.
Learn More About DTS Investment With Archer Investment Advisors
Archer Investment Advisors specialize in exploring DTS and helping you access the tax relief you need by avoiding potential capital gains potholes. If you have any questions about our experience or how well this could diversify your portfolio, reach out to us today.