7 Deductions You Should Know

If you’re ready to file your taxes, you’ll want to take a look at some deductions you might qualify for that could put some extra money in your pocket. If you don’t know what you’re eligible for, we have some suggestions that might be perfect for you. Let’s take a look.

Child Tax Credit

If you have one or more children who are your dependents, you’ll be able to apply for the Child Tax Credit. This payment was paid in advance during the latter months of 2021 (from July to December), so you might have already received a portion of it. But when you file your taxes, you’ll get the remainder that’s owed for any children dependents within your household.

Earned Income Tax Credit

The IRS has given lower-income families a way to have a break on their taxes by offering the Earned Income Tax Credit. If you have dependent children and can file as head of household with a low income, or even if you’re single with no dependents, you’ll qualify for this credit if you have a low income. 

Charitable Donation Deduction

If you have given substantially to charities throughout the year, you’ll be able to apply for this deduction as well. Smaller donations to charity might not necessarily qualify, however.

Recovery Rebate Credit

Did you spend 2021 waiting for a stimulus payment that never arrived? Stimulus payments were determined by the IRS according to 2020’s tax returns, which means if you’ve gotten a divorce or your financial circumstances have changed in 2021, you might not have received your stimulus check. If that’s the case, once you file your 2021 tax return and inform the IRS of your new filing status, you’ll be eligible for this credit.

Mortgage Interest, Insurance Premiums, and Property Taxes Write-Off

If you’re a homeowner, you’ll be able to write off your property taxes (up to $10,000), the interest you pay on your mortgage payment, and any mortgage insurance premiums for your property. These write-offs certainly help bring down any amount you might owe the IRS, so be sure to claim these items if you own a home.

American Opportunity Tax Education Credit

If you have a student in college, even if the student is yourself or your spouse, you might qualify for this credit. This credit is only good for the first four years of college, but any education credits are worth looking into if you and/or your dependents are enrolled in college. 

Saver’s Credit and IRA Contributions

If you contribute to a retirement fund, such as a 401(k) sponsored by your employer, you might qualify for the Saver’s Credit. IRA contributions are also considered tax-deductible although you might not be able to claim both of these credits together. If you file jointly with your spouse, your deductions will depend on whether or not they have their own 401(k) contributions write-offs.

With a little time and research, you’ll be able to determine which credits you qualify for and which ones you don’t. To give you a head start on any other credits or write-offs you might qualify for, here are a few articles we’ve found on Nerdwallet, Forbes, and Cnet to get you going.

To learn more about investing, closing the racial wealth gap, and growing generational wealth for Black and brown families, please visit Financial Joy School and become a part of our financial family.

The post How to Get a Bigger Tax Refund – 7 Deductions You Should Know appeared first on Financial Joy School.

Let’s talk about tax refunds. First of all, how do you get one? It’s simple. If you’ve overpaid your taxes throughout the year, you’ll get a refund from the government. You might also get a refund if there are any tax credits you qualify for. Tax credits are determined according to the amount of dependents you have and whether or not your income is below a certain threshold. 

What are some smart things you can do with your tax refund? We have some tax refund spending ideas.

Some Smartest Things to do with Tax Refund

Save It 

It’s always a good idea to have a little savings tucked away. Even a few hundred can make a difference. It’s always good to have something set aside if the kids get sick or the car starts making noises. Never be ashamed of how much you have in your savings. Everyone has to start somewhere. Saving your money is an excellent way to build an emergency fund or have money on hand if you are in the market to buy a car or a house.

Pay off Debt

Even if your return doesn’t match the amount of your debt, paying any amount is getting ahead. No matter what kind of debt it is, paying a little extra will help you in the long run, and you’re that much closer to having no more payments. Paying off debt is a great way to snowball your money, as what you no longer need to pay for one debt you can roll over into the next until all your debt is gone.

Invest It

Have you considered investing? You don’t need a lot to invest. Even an extra five dollars can grow if invested wisely. Investment is playing the long game. You might not see returns right away, but investing is the perfect way to grow generational wealth for your family. Here at Financial Joy School, we teach you how to invest and make your money work for you. If you trust the process, you’ll be setting your family up for success in years to come.

Save for College

Open a 529 college savings account and set aside some money for your children’s college fund. You can open one no matter the age of your child. The great thing about a 529 account is that friends and family can add funds to it as well according to Fidelity.com. With this ability for loved ones to also add to your child’s 529 account, you’ll be able to use investing to your advantage by growing your child’s college money in the long run.

Build Up Your Business

Are you an entrepreneur or a small business owner? Use your return to invest in your company. Do you need a new business laptop? More supplies? A new marketing campaign? Maybe you want to go back to college to take a few classes on marketing or business? All these things are wise investments to build yourself up and secure stability for yourself, your business, and your family.

Here are some more great options for what you can do with your tax returns at these links:

TurboTax

NerdWallet

CNBC

To learn more about investing, closing the racial wealth gap, and growing generational wealth for Black and brown families, please visit Financial Joy School and become a part of our financial family.

The post Five Things You Should Consider For Your Tax Refund appeared first on Financial Joy School.

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