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Many people are intimidated by the thought of doing their own taxes, but it can be a good way to save money. Plus if you have a simple return, there’s no real reason you cannot do your own taxes. Most of the tax code and rules can be found on the IRS website and they’re written in terms that are pretty easy to understand.
If you’ve decided to do your own taxes this year, or even if you’re going to get tax help from a professional, here are some tax rules you need to know.
Tax Rules for Education
The American Opportunity Tax Credit (AOTC) is still available through December 31, 2017. This credit can be used to help with the costs of higher education, like tuition and course materials for the first four years of college. The AOTC is worth up to $2,500 per student per year.
Visit a qualified tax professional or watch this video to learn more about the American Tax Burden. If you plan on doing your own taxes this year, file your taxes the smarter way and save up to $15 on TurboTax®.
Another way to help offset the cost of higher education is by deducting the cost of tuition for yourself, your spouse, or your dependents. A big benefit of this deduction is that you don’t have to itemize deductions in order to deduct tuition expenses. You are also eligible to deduct tuition expenses even if you don’t qualify for the AOTC.
Tax Rules for Children
Being a parent is hard work, but one advantage of having children is being able to utilize tax rules, credits, and deductions for them. One credit that’s available is the Child and Dependent Care Credit. The limit on this credit is $3,000 for one qualifying child or $6,000 for two or more qualifying children. This credit is used to help offset the costs of childcare if the parents of the child work or attend school. You can also claim the Child Tax Credit worth $1,000 per child (under age 17) every year.
Tax Rules for Homeowners
One of the ways that homeowners can save on their taxes is by deducting their mortgage interest payments. But in order to claim this deduction you have to file an itemized tax return. Another bit of good news is that homeowners who are still paying for private mortgage insurance due to having less than 20% equity in their home can deduct those expenses.
Tax Rules for Healthcare
One of the most confusing parts of doing your own taxes in the last few years is how your health care can affect your tax filing. If you signed up for health insurance via the health insurance marketplace, you will receive a 1095-A form, which you’ll need to complete your taxes. But if your health insurance is provided by an employer, you have to check a box on your income tax return indicating that you had coverage throughout the year. Additionally, you will receive a 1095-B or 1095-C depending on the size of the company you work for.
These forms are used to show that you did indeed have healthcare coverage, and they determine your eligibility for a tax credit if the health plan costs more than 9.56% of your income.
It Is Possible to Do Your Own Taxes
Tax rules may be a little bit difficult to understand at first, but that should not deter you from doing your own taxes. Many tax preparation software products make it easy for you by asking simple questions that help you determine if any of these rules apply to you. It also helps to make sure you understand the big picture of taxes.
* The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.