How can I reduce my tax bill?
Here are several ways you can reduce your tax bill.
1. Take advantage of tax credits
There are many tax credit available, and it is essential to claim all the benefits you are entitled to. Credits are usually better than deductions because they can reduce the tax you owe, not just your taxable income.
2. Save for retirement
Contributions to an Individual Retirement Account (IRA) can be a great way to lower your tax bill. The two most popular IRAs are Traditional and Roth, and the difference between them is when your contributions are taxed.
3. Contribute to your HSA
Pre-tax contributions to Health Savings Account (HSA’s) also reduce your taxable income. The IRS allows you to make HSA contributions until the tax deadline and apply the deductions to the current tax year. This means you can continue lowering your tax bill, even after December 31.
4. Setup a college savings fund for your kids
Originally created to help families save for college tuition, 529 plans were expanded by the Tax Cuts and Jobs Act of 2017 to cover savings for K-12 public, private, and religious school tuition. You can use up to $10,000 of 529 plan funds per year, per student, to pay qualified educational expenses.
5. Make charitable contributions
Making charitable contributions is another great way to reduce your tax bill. Donating cash, toys, household items, appreciated stocks and your volunteer efforts to qualifying charitable organizations can provide big tax savings.
7. Maximize you business expenses
Usually, business owners and self-employed taxpayers are able to use a much wider range of tax reduction strategies than individual taxpayers because of tax deductible business expenses. Some common business tax deductions include,
office rent
home office expenses
the cost of acquiring and maintaining a vehicle for the business
inventory
What is the EITC?
The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund.
Check if you qualify:
https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/use-the-eitc-assistant
Is there an age limit on claiming my child as a dependent?
To claim a child as a dependent, the child must be under age 19, or under age 24 and a full-time student for at least five months of the year; or be permanently disabled, regardless of age.
When is the deadline to file for taxes in 2025?
For individual filers, including employees, retirees, self-employed individuals, independent contractors, and gig workers, the due date to file your federal income tax return is Tuesday, April 15, 2025. However, the IRS announced disaster tax relief for all individuals and businesses affected by Hurricane Helene, including the entire states of Alabama, Georgia, North Carolina and South Carolina, and parts of Florida, Tennessee, and Virginia. Taxpayers in these areas now have until May 1, 2025, to file federal individual and business tax returns for 2023 and 2024.
April 15 or May 1, 2025 (in the abovementioned areas), is also the deadline to submit a Form 4868 to request an extension which, if granted, the new deadline will be October 15, 2025. When filing for an extension, the taxpayer is responsible for paying their tax estimates when submitting the Form 4868. If tax estimates are not paid when filing for an extension, the IRS might impose a penalty fee.
Where is my refund?
If a tax return has been submitted electronically, IRS releases the refund within 21 days from the filing date.
You can always track your refund here:
Should I file my taxes by myself (DIY) or hire a specialist?
The choice between DIY and hiring professional assistance hinges on the individual’s confidence and familiarity with their financial circumstances. While many resources exist to simplify the process, professional expertise may provide peace of mind in avoiding potential pitfalls. This choice is also determined by the complexity of your taxes and how organized you are. If your tax return is simple and you have all your tax forms and receipts organized, you might save yourself a bit of money filing your taxes on your own. If your tax return situation is more complex, if you find yourself having more questions than answers, and if accuracy and preciseness is more important than the fee, perhaps seeking a tax professional would be the best idea.
What type of Forms 1040 are available and how are they categorized?
When filing an individual tax return you must complete and file a Form 1040 with the IRS.
There are four variations of the Form 1040:
1. Form 1040: where a taxpayer reports their income and determines their taxes.
2. Form 1040-SR: this form is similar to the regular Form 1040, but it is dedicated to the senior taxpayers of the age of 65 or older.
3. Form 1040-NR: this form is to be used by the non-US citizen taxpayers who do not hold a permanent resident status (Green Card).
4. Form 1040-X: this form is to be used by a taxpayer when/if amending the taxes already filed on an above mentioned Form 1040.
What are the Form 1040 Schedules about?
Here is a brief overview of each Schedule that can be attached to a tax Form 1040:
Schedule 1: Additional Income & Adjustments to Income
Schedule 2: Part I-Tax
Part II- Other Tax
Schedule 3: Non-Refundable Credits
Schedule A: Itemized Deductions
Schedule B: Interests and Ordinary Dividends
Schedule C: Profit and Loss from Business
Schedule D: Capital Gains and Loses
Schedule SE: self-employment taxes; optional method to determine self-employed earnings
Schedule E: Supplemental Income or Loss (from rental real estate or royalties; from partnerships or S Corporations)
Schedule EIC (Earned Income Credit): Qualifying Child/Dependent Information
Schedule 8812: Additional Child/Dependent Tax Credit (if the child/dependent income credit is higher than the total amount of taxes owed)
What type of expenses qualify as deductions if I’m a freelancer/independent contractor/self-employed and I don’t have an LLC?
With the appropriate proof (receipts, etc.), here is a broad overview of categories of expenses that you might eligible to deduct:
Business Travel (mileage, lodging, meals)
Marketing/advertising expenses
Credit card processing fees
Self-employment tax
Health Insurance tax
Office supplies
Equipment
Phone&Internet services
Legal services
Memberships
Deductible taxes
Car expenses (maintenance)
Retirement contribution