If you have a family, you probably spend a lot of time planning for many things. You plan your vacation, your children’s education, your meals, your schedules, and many other things as well. You should also do some family tax planning. Here are a few tips.
Have a special folder in a filing cabinet where everyone can put their receipts. Saving receipts is key to documenting expenses for tax deductions. If you file your receipts immediately, you won’t be struggling to find them at tax time. Keep even the ones you think do not represent a tax deduction. When it comes to expense receipts, you can never have too many.
Stay current on the tax code. There are often changes in the tax code that effect how and when a family should make a purchase or plan an investment. Keep abreast of what is going on with the tax laws so you can receive every tax credit, deduction, and exemption for which your family is legitimately eligible.
Find out about the American Opportunity Tax Credit. This is a new tax credit that was developed for educational expenses. The credit’s maximum allowable amount was raised to 00 for four years. This represents a change not only in the amount of tax credit you can receive, but its duration, as well.
Look into investing in educational Savings Accounts for your children’s schooling expenses. These accounts, formerly referred to as Educational IRAs, are a very tax friendly way to save for a child’s educational future. While the deposits are not pretax, the earnings are tax-free. You can deposit up to 00 annually per child to the age of eighteen years.
If your family’s health care costs add up to 7.5% of your AGI, you can deduct them on your income tax return. This could be helpful if you have a family member suffering from illness or have welcomed a newborn this year.
If you own a business and you have minor children, you might want to consider hiring them to work for you. Your business can pay them up to 00 a year without being subject to income tax.
In this day and age, we all need to get a leg up on our financial situation. One of the best ways to do this is to see to it that you reduce your family’s tax liability as much as is legitimately possible through these tax savings and any others you can find.
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Tags: american opportunity, educational expenses, educational iras, educational savings accounts, filing cabinet, health care costs, income tax return, opportunity tax credit, s education, tax time