5 Tax Secrets to Save You Money
When Megan Mrazik, a senior financial analyst in Stamford, Conn., filed her taxes on her own for the first time two years ago, she did what 70 percent of Americans do: She sent them electronically over the Internet. To save money, Mrazik also used Free File, a no-cost service offered through the IRS website.
“It’s very user-friendly, especially for people who don’t have to itemize or declare anything specifically,” says Mrazik. “I also liked how, within 24 hours of submitting the form, you get a notification via email that tells you if it was accepted or denied.”
But e-filing for free is just the beginning. Cloud-based tax tools can also help you find tax breaks in the process. “It’s like having your own personal tax concierge,” says Mary Beth Franklin, a senior editor at Kiplinger’s Personal Finance magazine in Washington, D.C. “Most programs do the simple math for you, so you eliminate the stupid mistakes, and it asks you questions you might not have thought to ask yourself. You might qualify for tax breaks you didn’t know about.”
Beyond the online tax filing services like TurboTax, H&R Block and Tax Act, we scoured the Web to find the hottest tax-saving tips so you don’t have to. Here are five other ways to save on your taxes from start to finish:
Tax Secret No. 1: If you made home improvements, the government may pay up.
You heard right, and that’s just one of a dozen tax breaks you might qualify for with the Recovery Savings Act Tax Tool. (Paying college tuition or buying your first home can also net you a fatter return.) Answer eight simple questions, and you could be on your way to pocketing hundreds of dollars. It’s like found money!
Tipster: The Recovery Act
Tax Secret No. 2: Avoid red flags that could cost you.
Say a 1099 comes late or not at all. While it may be tempting to “forget” to include that amount on your return, the IRS receives copies of all of the W-2s and 1099s you receive -- and they’re pretty adept at catching which ones you failed to mention, which makes you a prime target for an audit. On Kiplinger’s site, you can find out the other red flags for auditors -- and a slew of helpful tax tips.
Tax Secret No. 3: If you missed out on a deduction, you can still claim it.
If you’ve just heard about the ENERGY STAR credit (where the government rewards you for making energy-efficient improvements to your home) but have already filed your return, you haven’t missed the boat. Indeed, the IRS allows you up to three years to file an amended return for stuff you forgot.
Tipster: Click On Detroit
Tax Secret No. 4: Visits to the doctor aren’t the only deductible medical expenses.
Depending on your adjustable gross income (AGI), you may be able to deduct a portion of what you spend on eyeglasses, bandages and even birth control pills. The list goes on.
Tax Secret 5: Use mobile apps to track your cash.
The IRS wants to save you money. It’s true: They’ve got a host of free, helpful services like IRS2Go , a new mobile app that gives you daily tax tips and lets you check the status of your refund. And Free File is a no-cost service that links taxpayers up with the right tax software for their needs and allows them to file effortlessly. Also, don’t lose track of your generosity. The app iDonatedIt was created by a CPA firm and helps you keep track of your donated items to reduce your taxes.
Bonus Tip: Did your kid work for your home business this year?
You may be able to write off their wages as a business expense if you follow the right steps. For example, you could write them a job description, cut them a company check and W-2 and pay them under $5,700 for the entire year so they don’t get stuck with a miniature tax bill themselves.
Tipsters: National Association for the Self-employed and AG Web
As always, check with an accountant to make sure you’re on the up-and-up before you follow any new tax tip from an online -- or offline -- source. And then hopefully reap the rewards. “All in all, I had a good experience e-filing, so I’ll be doing so again this year,” says Mrazik. “Best of all, it didn’t cost me any time or money.” Now that’s a tax season miracle.