Now that we’re in the heat of tax season, have you started filing your taxes yet? We managed to get my husband’s W-2 in the mail along with some 1099s, so I spent last weekend entering them into TurboTax (love how easy it is to knock out some work with TurboTax, save it, and be able to pick up where I left off).
But that’s the interesting thing when you’re married, you have two sets of paperwork to wait on before you can submit your taxes. However, if you’re living the single life, you can usually knock it out quicker since you’re not waiting on spouse’s forms. Another benefit for single filers is that they have plenty of tax deductions and credits that they can qualify for which minimizes taxes and in some cases, maximizes their tax refund!
With the new tax law changes, there may be some bigger changes that may impact the way you file. It’s easy to get lost with all the noise, so I want to highlight five of the tax benefits to help you claim the most and get the tax refund you deserve.
When you file your taxes, you have the option to take the standard deduction or itemize them. One of the biggest differences between last year and this year is the amount of the standard deduction. Last year for someone filing single it was $6,350, but this year, it’s $12,000 – that’s a significant difference right off the bat!
If you’re a single parent and filing as head of household, your standard deduction went from $9,350 to $18,000. Now going with a standard deduction is less involved, but it might not be the best move financially if you have itemized tax deductions that add up to more than the standard deduction.
It’s best to go with the option that benefits you the most and gives you the biggest tax refund. TurboTax will ask you simple questions about key tax deductions like your home mortgage interest, property taxes, and charitable deductions up front and calculate whether you will benefit from the standard deduction or itemized deductions simplifying your tax experience. You can also check out our Standard vs. Itemized Deduction Interactive to get an estimate if you plan to claim the standard deduction or itemized deductions.
You may qualify for the standard deduction, but here are some other tax credits and some itemized tax deductions that you can also check out.
Don’t you love when you do something good and get a reward on top of it? Well, welcome to the saver’s credit. You can stash away money for retirement in a 401(k), 403(b), 457 plan, traditional IRA, or SEP IRA and you may qualify to get a tax break.
This non-refundable tax credit is designed to help low to moderate income savers. The maximum adjusted gross income for eligibility for single filers in 2018 is $31,500.
Student Loan Interest
Graduated from college? Chances are that degree came with a price tag. Right now, the average amount of student loan debt is over $37,000! That’s a huge hit to your budget, but if there’s a financial silver lining with that debt, it’s the fact you can deduct the interest you pay on those loans.
As a single filer, you can deduct as much as $2,500 of student loan interest.
To give is kind, so to track your charitable contributions is a smart tax move and your charitable contributions may be very helpful to you as a tax deduction. Keep those receipts (or pdf files) from qualifying organizations in a handy spot. As a general rule, deduct the fair market value of the property (and no more than 60 percent of adjusted gross income, depending on the organization you donate to).
Not sure how much your donation is worth? You can use TurboTax ItsDeductible to accurately track and value your donations and then transfer the information to your TurboTax return.
Home Mortgage Interest
Buying a home is typically one of the biggest purchases we make. It can also be a sweet tax deduction if you can itemize your deductions. Do you own a home? You may be able to reduce your taxable income by claiming the interest you paid on your mortgage.
Your Take on Taxes
There you have it – some tax benefits to check out! Now it is time to maximize your tax deductions and credits so you can get the biggest refund you deserve. I’d love to get your take on taxes. Which tax benefits do you qualify for this tax season? What are you planning on using your tax refund for?
Don’t worry about knowing these tax rules. TurboTax will ask you simple questions about you and give you the tax deductions and credits you’re eligible for based on your entries. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent with an average of 15 years experience to get your tax questions answered from the comfort of your couch. A TurboTax Live CPA or Enrolled Agent can also review, sign, and file your tax return.
Elle helps families at Couple Money achieve financial freedom by sharing tips for reducing debt, increase income, and building net worth. Learn how to live on one income and have fun with the second.