Are you searching using the phrases ‘tax preparer in my area‘ on the search engine. In the year 2018, the IRS did release almost 111.8 million dollars as a refund. The average amount that taxpayers received that year was around $2869.
In 2019, the average tax refund was around $2711. Of course, these figures might differ from state to state. If you play your cards right, you can easily save thousands of dollars each year. Here are some excellent tips that will help you understand:
Increase the Contributions to IRA:
Firstly, do you know that you can save a significant amount of money each year by contributing to an IRA or an Individual Retirement Account?
Undoubtedly it is one of the best ways to save money. However, the best part about doing this is that apart from saving some money, you are going to save funds for your retirement.
That means when the time comes to retire, you will accumulate enough money to have a wonderful life afterward. Here are the limits of how much you can save in this segment:
1. You can save upto $19,500 on 401(k), Thrift Savings Plan, 401(b), and most of the other 457 plans.
2. Save upto $6500 on catch up contributions on accounts if you are aged 50 and over — Limit has increased by $500 compared to last year
3. Contribute upto $13,500 on simple retirement accounts — the savings increased over $500 for this segment as well
4. One can contribute upto $6000 for IRAs
5. The amount you can pay towards catch up contribution for an IRA is $1000 if you are aged 50 and above
The Health Savings Account
Secondly, another way to reduce the amount you pay towards taxes is by contributing your money to HSA or Health Savings Account. Apart from saving money on taxes, you will have a sufficient reserve of funds to cover you or your loved one in the time of need. But here are the limits for your reference:
1. If you are single, you can save almost $3500 to the account
2. If you are married, you can save upto $7000 to the account
3. If your age is above 55 years, you can save another $1000 to this account
Get Tax Credits
Thirdly, many people do not know how valuable are the tax credits. One can save a dollar for dollar when they utilize this option. You can, for example, get $2000 if you have a child under the age of 17 years and he qualifies. CDCTC or Child and Dependent Care Tax Credit (is one other credit that you can use. Parents that drop their kids at day-care can save upto $3000. They can save almost $6000 if you have two kids.
Your Medical Expenses
Did you undergo major surgery? Then you might be eligible for a tax deduction. All those who had medical expenses greater than 7.5% of their gross income are eligible for it. For example, your total gross income is $60,000 for the year, and your medical expenses crossed $4500, you can deduct your medical expenses.
In Conclusion, take some time to find the answer to this golden question, ‘best tax preparer in my area.’ A good tax preparer will help you understand all the available options that you have.