What’s yours is mine and mine is… Uncle Sam’s?!
One of the ultimate goals in society today is to eventually own something. Unfortunately, the whole American Dream notion tends to be accompanied by a few undesirables; one of which is property taxes. Depending on your budgeting skills and your own aspirations, you could end up paying taxes on one or any of the following:
- Vacation home
- Rental property
The list goes on and on. With our end goal of home ownership in mind, we should fully realize all of the additional expenses that come along with it. Property taxes are one of those major expenses. Ringing any bells? If so, we’ve got some good news for you. Although you can’t technically nix paying taxes on your property altogether, you may qualify for a tax deduction, thanks to Uncle Sam.
Which property taxes qualify for the write-off?
Continue reading “Property Taxes 101: How to Claim a Tax Deduction”
Feel like the coach of a small football team? The IRS gets it!
Whether you have just one on the way or five and counting, kids are expensive. That’s why you should take advantage of tax cuts whenever possible. In addition to claiming them as dependents, you may also qualify for some other credits. One that could end up benefiting you substantially is the Additional Child Tax Credit. Let’s see if this one is for you!
What is the Additional Child Tax Credit (VS. the Child Tax Credit)?
You’ve probably heard of the Child Tax Credit. I’ll sum it up for those of you who don’t (but also check out our other article which goes into more detail, “How to Claim the Child Tax Credit”). Basically, it is a credit that can reduce your tax liability up to $1,000 per qualifying child listed on your tax return. This credit is NON-refundable, meaning that it will reduce your tax liability to $0 but will never overflow into a refund for you.
Now that we’ve covered the Child Tax Credit, you’re probably wondering what the Additional Child Tax Credit is all about, right? This is the refundable credit that will fork over the difference that you weren’t able to claim from the Child Tax Credit.
Let’s take a look at an example:
Cindy and Lou have three qualifying kids listed on their joint tax return. Their tax liability is $2,500. After applying their Child Tax Credit at $1,000 per child, they were able to get their tax liability down to $0. They then figured out that they qualified for the Additional Child Tax Credit. Cindy and Lou were able to claim that additional $500 as a tax refund!
Here’s the math: $2,500 IRS tax liability – $3,000 total Child Tax Credit for three kids = – $500 Continue reading “How to Qualify for the Additional Child Tax Credit”
It’s been said that life comes full circle. Well, so do taxes.
It’s difficult to watch your parents grow old. The ones who supported you while growing up are now the ones you’re taking care of. You may be curious if you can claim your parents as dependents on your tax return like they once did for you.
The answer lies in the following five tests set up by the IRS:
#1. They must be related to you.
#2. They must be a citizen or resident of the United States, Canada, or Mexico.
#3. They must not be filing a joint tax return.
#4. They must have an annual gross income of less than $4,000.
#5. You must provide more than 50% of their financial support for the year.
With these qualifications in mind, let’s take a look at some special circumstances that might apply to you and your parents. Continue reading “Claiming Parents as Dependents If They Receive Social Security Benefits”