A Tax Expert Shares Her Best Advice for Lowering Your Tax Bill Before You File
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The Live Richer Speaker Series from GOBankingRates is an exciting opportunity for me to introduce the financial experts and influencers in my network to a wider audience and to receive valuable tips and advice on everything from taxes to investments. The program opened with a presentation by Kathy Pickering, Vice President of Regulatory Affairs at H&R Block and Executive Director of the Tax Institute, answering your most burning questions about taxes.
Related: 8 New or Improved Tax Credits and Breaks for Your 2020 Returns
Here's what Pickering had to say in order to get the maximum number of deductions, lower your taxable income, and more.
When is it worth paying someone to prepare your taxes?
In my view, it's always worth paying someone to prepare your taxes. That said, if you are going through a meaningful life change, this is the time you might want to consider getting help with your taxes. So if this is your first time filing, you'll want to work with a professional and get that objective advice and learn about the things you need to know. Then when you have a big change like buying a house, getting married, having a baby, things like that really have a lot of tax implications and you don't want to miss out. So this is a good time to get help.
Learn: How to List Deductions Like a Tax Professional
How can I reduce my taxable income?
To reduce your taxable income, you have one more thing to do before the tax deadline and that will contribute to an IRA. That's a really cool thing. (You can contribute) up to $ 6,000 if you are under 50, up to $ 7,000 if you are over 50 is really good to do.
What are the most common tax deductions that everyone should take advantage of?
Some of the most common tax deductions depend on where you are in your life. If you have children, you must consider all options to file a claim, including (including) childcare costs and child tax credit. If your child is older than 17, the new other dependent loan is now available. There are many child and family loans that are available. When you're in college, there's American Opportunity Credit for the first four years of college. That's up to $ 2,500 to offset your tuition fees. And now, with the tax reform, there is this new deduction of 20% of business income available for the self-employed, freelancers and small business owners. There are many different things that you need to get smart about depending on the situation because you don't want to miss out on anything.
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See Also: How To Avoid Paying Tax Legally - And The 11 Craziest Ways People Have Did It
What's the # 1 Thing Not to Do When Filing Taxes?
The no. One thing that people shouldn't be doing when it comes to their taxes is not a file. We hear so often: "I didn't make enough money" or "I think I owe something" or "I'm afraid I will not file my taxes." The penalty for failing to file your taxes is so much higher than failing to pay your taxes. Even if you can't pay, file your tax return. You can always create a payment plan later that will help keep these penalties down.
More Information: The complete guide to filling out your W-4 form
What is the main thing that full-time employees with some professional income should know when it comes to taxes?
If you are a full-time employee, your income tax from your main job is withheld by your main employer. If you are a freelancer on the side, you may not know that you will have to pay tax on that freelance income as well. Either you want to increase what you withhold from your regular paychecks so you don't have to balance your freelance work, or you want to make estimated projections and payments on your freelance income. No taxes are withheld on the money you get on the site, so this is something you need to plan for.
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Gabrielle Olya contributed to coverage for this article.
Last updated: April 28, 2021
This article originally appeared on GOBankingRates.com: A tax professional gives her best advice on reducing your tax burden before filing
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