A few simple tips can save money on your taxes.
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Who isn’t looking to save a few bucks these days? The Internal Revenue Service offers some easy ways you can save money on your taxes.
IRS Free File. Fast and easy, IRS Free File allows everyone to prepare and e-file their federal tax returns for free. And, the step-by-step, brand-name software offered by IRS’ commercial partners helps you find the tax breaks you are due.
Each of the approximately 20 private-sector partners tailor their offerings based on criteria such as income, age or state residency. If you need help finding a Free File match, just select the “Pick a Free File company” as your option at the right side of the video on the homepage. Simply enter a little information about yourself, and the matches will appear. Some also offer state returns for free or for a fee.
- While all the companies have different criteria, if you made $57,000 or less in 2011 — and that’s 70 percent of us — you will be eligible for at least one free tax software program.
- If your income was higher than $57,000, you can still prepare and e-file your return for free by using Free File Fillable Forms. This is the electronic version of IRS paper forms.
Just go to www.irs.gov/freefile to get started.
Organize Records. The IRS recommends keeping all tax-related documents for three years, in case of an audit. Keeping track of income-related documents can help you take full advantage of deductions available to you.
Records to have handy when it’s time to fill out this year’s returns:
- Copy of last year’s tax return
- Valid Social Security numbers for each family member
- All income statements, i.e. W-2 forms
- Interest/dividend statements, i.e. 1099 forms
- Form 1099-G showing any state refunds
- Unemployment compensation amount
- Social Security benefits
- Expense receipts for deductions
- Day care provider’s identifying number
Find Out if You’re Eligible for the Earned Income Tax Credit. No tax benefit offers a greater lifeline to working families than EITC. Yet, one out of every five eligible taxpayers fails to claim it, according to the IRS. Because of the economy, even more people may be eligible if they have had changes in their earned income. Here are a few things to keep in mind:
- The amount of qualifying income depends on your situation. For example, married workers, who earned $49,078 or less from wages, self-employment or farm income last year, who are filing jointly, and have two qualifying children, could be eligible. The maximum credit for 2011 tax returns is $5,751 for workers with three or more qualifying children.
- Eligibility for the EITC is determined based on a number of factors including earnings, filing status and eligible children. Workers without qualifying children may be eligible for a smaller credit amount.
- You must file a tax return, even if you do not have a filing requirement, and specifically claim the credit. Those who typically fail to claim the EITC include rural workers and their families; non-traditional families, such as grandparents or foster parents raising children; taxpayers without qualifying children; individuals with limited English proficiency; and taxpayers with disabilities.
- If you use a paid tax return preparer, make sure to seek out a reputable one. Tax professionals must sign returns they prepare and use their Preparer Tax Identification Numbers.
To learn more about EITC, go to www.irs.gov/eitc and use the EITC Assistant, or ask your tax professional.