Top Things You Need to Know
If you're filing taxes this year, families in particular shouldn't t overlook major deductions they may be eligible for:
The Earned Income Tax Credit (EITC) - Millions of low- and moderate-income
families are eligible but don't claim the EITC,
which is worth an average of about $1,760. As many as 25 percent of those eligible
- or about 7.3 million taxpayers last year alone - failed to claim it, according
to government figures. Many working families fail to claim the EITC due to a lack
of awareness or the complexity of the eligibility requirements and tax forms.
tax benefits - Millions of Americans don't maximize their
tax benefits, in part, because it can be a complicated process. Nearly
percent of eligible taxpayers - 4.1 million people - fail to claim education
tax benefits, according to a recent government report. Evaluating which education
tax break provides the greatest savings - the lifetime learning credit, the Hope
credit, and the tuition and fees deduction - can be difficult because of phase-out
provisions and varying eligibility guidelines.
Additional helpful tips:
Start early. The earlier you get organized, seek advice, and get your taxes filed, the
less likely you will be to miss tax benefits because your rushing and the sooner
you will get your money back.
Get organized. Start the new tax year off right by developing a simple record keeping
system. Use the previous year's tax return as a reference to determine file categories
and make certain you keep separate files for personal and business taxes. Having
complete tax records will ensure you claim the deductions and credits to which
you're entitled and help you avoid penalties and interest on unreported income.
Seek professional advice. Today, taxpayers must wade through 131 pages of instructions for a Form
1040 - over triple the number in 1975 and more than double the number in 1985.
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