Now that taxes are over

By Chuma Megafu

May 23,2014

Are you happy with the outcome of your taxes? Did you get a refund or did you incur a tax liability. Regardless of the outcome, their are simple steps you can take for a better outcome next tax season.

If you incurred tax liability, you probably are not having a enough withheld from your paycheck through the year or as I often hear ,” oh I went exempt during the year , I meant to change it after a while but I totally forgot.” If that is you, be reassured you are not alone. Emergencies do come up and it might seem like a good idea to go exempt and have all of your money now, but then at the end of the tax season you are struck with a tax liability.

If you got a refund are you happy with the refund? Would you use a bigger refund next filing season? If you plan prudently, you can use the income tax for effective budgeting and savings , which can be used for those big ticket item purchases.

The earned income credit which the government provides for taxpayers earning less than $51567.00 for the tax year 2013 can be as much as $6044.00 with three dependents, $5372.00 with two dependents, $3250.00 with one dependent and for taxpayers with no dependents and earning below $14340.00 this credit can be as much as $487.00. However the Obama administration is pushing congress to increase the amount available for taxpayers with no dependents to $1100.00.

Another tax credit available for tax payers with dependents under the age of 17 is the child tax credit. This Bush era tax cut was set to expire end of 2012. However the fiscal cliff deal signed on Jan 3, 2013 extended this credit for 5years. This credit provides up to $1000.00 for each child you claim .

The education credit is another credit that is also currently available and can provide as much as $2500.00 for qualified tuition, registration and books for higher education for students taking at least 6 units in a calendar year. This credit is also available for your dependents . So as the saying goes ” education does pay.”

Depending on your family size and limiting your withholding to one or zero and enrolling in school you will be smiling to the bank next tax season. A word of caution, some tax advisers see this strategy of the government holding on to your money all year with no interest being paid as rather expensive but I feel that is the prize you pay for getting that fat check all at one time.

for further discussion on how to minimize your tax liability and increase your refund , you can reach us at
1296 S La Brea Ave
Los Angeles Ca 90019