Tax Relief: 5 Tips For A Higher Return

It's true that the only inevitabilities in life are death and taxes, but if tax relief is what you are looking for, here are some tips to help reduce your taxes as much as possible.

1. Take Advantage of Tax Credits

One of the fastest ways to improve your tax return is to take advantage of the credits the IRS offers. You can get a direct reduction of the tax you owe for:
  • Tuition paid for higher education
  • Home purchases (approved for 2008 and 2009)
  • Childcare costs
  • Approved improvements to energy efficiency in your home
  • Approved energy efficient vehicle purchases
2. Take the Time to File Long Form

Many people who could be paying lower taxes are either intimidated by the process or averse to taking the time to complete the necessary paperwork. This can end up costing the taxpayer thousands of additional tax dollars. If you don't like doing your own taxes, you can pay a fee (usually less than $200) to have a company file your taxes for you. Not only are these companies often able to find additional tax relief for you, but they are also capable of providing you with an immediate refund.

3. Take Advantage of Home Business Deductions

If you work from home or use a portion of your home to run your business, there are several deductions you can take. The portion of your home that is used for business can be claimed and expenses deducted for
  • A portion of your rent or house payment
  • A portion of your heat and utility costs
  • Part of the cost of home improvements
  • The cost of equipment used to run your business
  • Mileage/automobile costs
4. Medical Costs

If you paid medical expenses out of pocket that exceed a certain percentage of your annual income, you are able to claim those expenses as a deduction against your taxable income. You cannot claim costs that were paid by your insurance, and typically, you cannot claim your actual health insurance premiums, but if you paid for an out-of-pocket surgical procedure or treatment, it is most likely deductible.

5. Saving Money

In an effort to encourage saving, the IRS offers tax credits for those who put money away for retirement in approved accounts like a 401(k) or an IRA.  While income limits apply, for some savers, this can result in a dollar for dollar reduction of taxable income.

The advice provided here may or may not be applicable to your situation. Always refer to your accountant or tax attorney for specific information.
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