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It’s that time of year where most people are scrambling to gather all their necessary tax documents and hoping that the tax filing can’t possibly get any more complicated than it already is. We’ve scoured the web for you and found a few tips to help you in filing in 2020.
Charitable Donations
Make sure you include ALL of your charitable donations. One tip is to also include any “ingredients” used in those donations. For example, if you volunteered to make food for a charity, you can claim the ingredients as well as the gas that you used to delivery said food.
Do Not Procrastinate
Yes we know – this is a given. But SO many people end up putting off doing their taxes and it can really cause stress and sometimes late feeds in the end. The best thing to do is to start doing your taxes as soon as you can have all of your necessary tax documents.
Increase your Retirement Contributions
One way to keep more of your hard-earned money is to contribute as much of your income as you can to your retirement contributions, which is not taxed. In order to do this and have it actually affect your 2019 tax year, you have to set up an IRA and actually contribute to it prior to the April 15 deadline.
Create a Health Savings Accounts and Fund It
This is another great way to reduce your taxable income. Create a health Savings Account – which is a great asset to have anyway – and whatever income you put in there, is non-taxable. You can use this money for future medical costs, which is always great to have in case of unexpected medical costs.
Tax Credits
For parents with children under 17 years of age, ensure that you utilize taxes credit for dependents. For each qualifying child, you can deduct $2,000 from your federal income taxes. And for parents who have children in daycare, you could quality for the Child and Dependent Care Tax Credit (more info here) – which allows you to deduct $3,000 per child or $6,000 for two from your federal income taxes.