You may be able to deduct college courses, disaster
If you've put off your taxes until the last minute, here's a
little reward for your procrastination: Time offers seven tax breaks that could
save you money—now that you actually know about them:
• Higher education: There are certain credits available for qualified
tuition, and you may not even need to be in a degree program to be eligible for
them. Deductions are also available for college-related expenses like loan
interest and room and board.
• Taking care of a sick parent: Though it may
not be simple, it could be worth it to look into getting your parent declared as
a dependent if you provide half or more of his or her financial support—even if
the parent doesn't actually live with you.
• Teaching: Eligible educators can
deduct as much as $250 for school supplies purchased out of pocket, even if they
don't itemize on their taxes.
• Natural disasters: If a federal disaster area
was declared and you suffered losses, you may be able to claim it under the
disaster-related casualty loss deduction. There are also some instances in which
you can deduct losses due to theft.
Still need to procrastinate before starting your taxes
Things You Should Do With Your Tax Refund
The hard part is over. Everyone now should have filed
their taxes. And now we all have some sweet refunds. According to the latest
reported tax data from the IRS, the average American can expect to receive a tax
refund of nearly three thousand dollars. It seems like free money (even though
it’s really not) so of course you may want to spend it, but there are other
things you should consider doing with the refund. They are definitely less fun
but they will pay off in the long run. Here are 7 things you should consider
doing with your tax refund.
This is the wisest but the least exciting. You could save
it for way down the road or put it towards something like a vacation next year.
It is probably best to talk to a professional about this
one but with investing you have lots of options. You can do the stock market,
using tools like mutual funds and ETFs or you could increase your 401(k)
contributions at work and cover the difference with your tax refund.
Pay off your debt
With the country’s collective debt reaching a
whopping $1 trillion and student loan debts topping credit card debt, this is
obviously something a lot of people face. We did a poll earlier this week that
revealed that almost 70% of Grindstone readers are still paying off loans, and
5% have already defaulted. If you are carrying debt, especially high interest
credit card debt, you should consider taking a small part of your refund and
paying down your credit card debt.
Put it towards your retirement
Putting the money toward your
traditional IRA or a Roth IRA retirement account may be the way to go.
Put it towards a home improvement
You can use the extra money to
make home improvements. This should add equity to the value of your home over
This is obviously the fun one! It does feel like you
suddenly got a bonus for doing nothing when you get your tax refund so of course
you want to spend it. Maybe spend some of it on a treat and save the rest.
Stash money so you can hire an accountant for next year
found yourself totally overwhelmed with your taxes this year and almost had a
breakdown because you thought you made a mistake, maybe it's time to hire an
accountant. A recent Grindstone poll found that 12.5% of our readers hire
someone else to do their taxes.
And the countdown begins . . . four days until Tax Day, which
is on April 17 this year. Seems like most of you have already filed, but for
those of you who haven't, Kathy Pickering, executive director of The Tax
Institute at H&R Block, names some of the most common tax mistakes that
people make. Here they are:
Failure to take into account new tax
Recording an incorrect filing status, such as Head of Household, when
it should be Married Filing Separately or Single.
Social security numbers are
incorrect, missing, or don’t match the names on the return.
incorrect or missing forms, schedules, and supporting documentation for your
Forgetting to sign a paper-filed return.
Missing valuable tax credits and deductions.
Not allowing enough time to prepare the tax return, and rushing
through the preparation process.
Recording incorrect financial institution
routing and account numbers for a direct deposit of your refund.
has a nice roundup of how thenew tax laws will affect your 2011 tax returns,To
prevent most of these common tax mistakes, the IRS recommends to file your tax
returns online, which you can easily do through Turbo Tax or IRS Free File. You
should also double check all your figures to make sure that you're not doing the
math wrong and that you're not inputting the wrong information.
really rushing through your taxes, perhaps filing at the last moment might not
be a good idea because you'll be more prone to making errors. You can opt to
file an extension — our friends at H&R block say they are offering free
extension filing from now until April 18, so you might want to take advantage of
this freebie! Keep in mind that the extension applies to just the return and you
can't delay your payment.