3 Signs Married Couples Need to File Their Taxes Separately

With April 18 just around the corner, chances are you and your spouse are knee-deep in tax work. Most couples file jointly to take advantage of various benefits but depending on your situation, you may want to file separately.

We tapped Kelly Phillips Erb, a Philadelphia tax attorney who blogs at Forbes, for some pointers on when to do this. (Sadly, love doesn’t conquer all when it comes to the tax man.)

1. When a Spouse Has a Tax Liability

Though your spouse’s liability won’t carry over to you, it could throw a wrench in your taxes if you file jointly, Erb says. “It can make filing taxes complicated because you have to file an injured spouse claim” if something goes wrong. For example, if your husband owed back taxes but as a couple you got a refund and the IRS decided to take it, you’d be prompted to file an injured spouse claim. This may help get part of your refund back.

Your spouse’s back taxes could also impact their credit score if the problem gets bad enough. The government could make a claim on your property until the debt is repaid, which is known as a tax lien. This will show up on your spouse’s credit report and could make it harder for them to borrow money in the future. (You can see how a tax lien and other factors may be hurting your credit by reviewing two of your free credit scores on Credit.com, which are updated every two weeks.)

2. When a Spouse Can’t Be Trusted 

“When you file a return, you sign under penalty of perjury,” Erb explains, noting taxpayers vow to report everything to the letter. “If you sign the return knowing they tend not to be forthcoming, you’re putting yourself at risk.”

Erb recalls a client who dealt with this issue for 15 years and “ended up with a liability in the millions she couldn’t pay.” However, she had signed a return with her husband claiming things were just fine. The IRS eventually chased both of them down for the money, even after they separated. “When you get married, you like to think everything’s rainbows and unicorns,” Erb says, but “don’t file if you think they’re not being truthful. Ignorance is not an excuse.”

3. When a Spouse Lives Abroad 

“There are some tax reasons why you might file separately, but as a rule, most people file separately for non-tax reasons,” Erb says. However, if one spouse has a different residency — not just between states but in another country entirely — it “might be advantageous to file separately, because depending on the situation, you could possibly lose credits or other tax breaks that you might not want to.”

Image: svetikd

 

The post 3 Signs Married Couples Need to File Their Taxes Separately appeared first on Credit.com.

50 Things to Know If You Haven’t Done Your Taxes Yet

Here's a list of 50 things to keep in mind as you get ready to file your taxes.

You’re motivated by a deadline, you’re busy, you’re still getting organized — whatever the reason, you haven’t filed your taxes yet. That’s not a huge deal (there’s a deadline for a reason), but still, waiting until the last minute to file your taxes means you might be rushed. And that means there’s a higher likelihood of making mistakes or overlooking something important.

To help you avoid making a mess of an already unpleasant task, we put together a list of things you should keep in mind as you get ready to face the job you’ve been putting off for months.

1. The Sooner You File …

… The sooner you can get a refund. The IRS says it issues nine out of 10 refunds in less than 21 days.

2. Waiting to File Puts You at Risk

Taxpayer identity theft is no joke. It generally involves someone using your Social Security number to get a fraudulent refund — preventing you from getting yours in a timely manner.

3. If You’re a Tax Fraud Victim, You Need to Prepare a Paper Return

“First, I would definitely contact the IRS, and you should also contact the credit bureaus, and then you would just have to paper file your return if they already e-filed using your Social Security number,” said Lisa Greene-Lewis, a certified public accountant and tax expert with TurboTax.

4. The Deadline to File …

… Is April 18. No, that’s not a typo. April 15 falls on a Sunday this year, and April 16 is a holiday in the District of Columbia. So Tuesday, April 18 it is.

5. It’s a Hard Deadline

Your paper return must be postmarked by April 18. An e-file must be submitted before midnight on April 18. Otherwise, the IRS could slap you with fees.

6. But You Can Get an Extension

You can file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, which gives you an additional six months to file.

7. The Extension Is for Paperwork, Not Payment

If you think you’ll owe taxes, you must make your best guess using previous years’ information and an online estimate calculator.

8. Unpaid Taxes Carry Fees …

Interest on unpaid taxes compounds daily from the due date of the return to the date they’re paid in full. The failure-to-pay fee is one-half of 1% of your unpaid balance for each month, or part of a month, up to 25%, until the debt is paid in full.

9. … & Even Affect Your Credit Score

If your unpaid-tax problem gets bad enough, the government may make a claim to your property until the debt is repaid. That’s called a tax lien, and it will show up on your credit report. (You can see how a tax lien and other factors affect your credit by reviewing two of your your free credit scores on Credit.com, updated every two weeks.)

10. Make Sure You Have All Your Forms

“Keep a list of all of your jobs during the tax year,” said Abby Eisenkraft, an enrolled agent and CEO of Choice Tax Solutions. “Some taxpayers receive numerous W-2s (think actors, temps, etc.). Freelancers — you may receive numerous Form 1099-Misc; be sure you received them all.”

11. But Report All Your Income, Even If You Didn’t Get a Form

“Some employers are sloppy and may not issue them to you by Jan. 31 of the following year. Regardless, you must report all of your income,” Eisenkraft said. You can ask an employer for a copy of a missing W-2 or ask the IRS for transcripts of forms you think you didn’t get. Of course, this takes time, so you may need to file an extension.

12. *ahem* ALL of Your Income

“The easiest way to get an IRS notice is to omit reporting all of your income,” Eisenkraft said. “Also, remember that jury duty and prize money (lottery, etc.) are also taxable.”

13. Plan to Wait in Line

At the post office, at your local tax preparer’s office — anywhere that does anything having to do with taxes.

14. Take Advantage of Technology

There are several ways you can file your taxes for free without having to do them the old-fashioned way. Tax software can be a huge help when you’re facing a time crunch.

15. Affordability Is No Excuse

“Many people put off filing their taxes because they can’t pay the full amount,” said Samuel Brotman, a tax attorney and owner of Brotman Law in San Diego. “You’ll cause far more headaches if you don’t even attempt to play ball with the IRS, though.” See: aforementioned fees.

16. Make an Effort to Pay

“It’s in your best interest to file and pay as much as possible by the April 18 deadline,” Brotman said. “If you’re just not ready or able to file by the deadline, make sure you file for an extension. The IRS will automatically grant a six-month extension, giving you additional time to get your taxes in order.” Thinking about paying your taxes with a credit card? Read this first.

17. Or Get a Payment Plan

Keep in mind you must file your tax return before applying for a payment agreement, so get cracking if you think you’ll need one.

18. The Chances of an Audit Are Low

Of all the individual income tax returns filed in 2014, the IRS audited 0.8% and 1.3% of corporate returns. (You can read more about how to avoid an audit here.)

19. But You Still Need to Be Careful

Just because it’s unlikely you’ll get audited doesn’t mean you shouldn’t prepare your taxes as if you will. Not only could you get in trouble for a sloppy return, you could miss out on savings through deductions or credits you didn’t look into.

20. Watch Out for Scammers

Whenever people need help, there are other people out there waiting to take advantage of them. If you’re asking someone to prepare your taxes, make sure they’re qualified to do the job and that they have a good reputation. This guide can help you determine whether or not you need a pro to do your taxes.

21. Ask for Help

If you can’t afford or don’t want to pay for a professional, that doesn’t mean you’re totally on your own. “Go to trusted friends or family with last-minute questions on anything that might be confusing. With a little elbow grease, technology and friendly advice, you can get your maximum refund back — painlessly,” said Micah Charyn, a financial adviser with FTB Advisors in Nashville, Tennessee.

22. You’re Responsible for What You File

Keep in mind that, ultimately, you’re responsible for what’s in your tax return, even if you used software or an accountant to help you. Don’t zone out just because someone else is doing the heavy lifting.

23. ‘Do You Spell That With a C or a K?’

Of course, you know how to spell your name, but don’t leave anything to chance. This is especially important if you changed your name recently. Your tax return must have your legal name on it.

24. While You’re At it, Double-Check Your Address 

This is an easy one to mess up if you’ve moved. “Your state may ask you where you lived by the close of the tax year you are filing, but you must file with your current address,” Eisenkraft said.

25. Your Social Security Number

“When you are tired or distracted, it’s so easy to transpose numbers,” Eisenkraft said. “And with so many numbers jumping out at you on the tax return, it’s easy to miss. The IRS will reject your tax return if the Social Security number is incorrect.”

26. Your Dependents’ Social Security Numbers

You must have the right Social Security numbers to get associated credits.

27. & Your Bank Account Info

You want that refund ASAP, right? “One mistake that we’ve seen before is listing the wrong bank details on your taxes,” said Jayson Mullin, the owner and founder of Top Tax Defenders, a tax resolution company in Houston. “This means your return won’t end up in your account. If you notice you’ve made this mistake, you’ll have to notify the IRS and wait an additional six weeks for a check to arrive in the mail.” The same goes for making a payment: You want that go to through.

28. Make Sure You Can Legally Claim Dependents

“There are relationship tests, gross income tests, residency tests, etc. Make sure the person you are trying to claim as your dependent passes all of the IRS tests,” Eisenkraft said. “And if your child is in school and working, remind him or her NOT to claim his own exemption.”

29. There Are Lots of Deductions You Could Potentially Take …

This list of common deductions is a great place to start.

30. … Like Stuff You Bought for Work

“I call this ‘looking for change in the sofa cushions,’” said Dominique Molina, a CPA in San Diego. “Go back through your bank and credit card statements and scan through, looking for expenses you haven’t been reimbursed for. These can be deducted on Schedule A under Unreimbursed Employee Expenses.”

31. Student Loan Interest

You can get the forms you need from your student loan servicer. They’re usually right there in your online account.

32. Medical Expenses

“You can deduct out-of-pocket medical expenses if you itemize (file Schedule A),” Eisenkraft said. “You cannot deduct any expenses that are reimbursed by insurance. If your medical premiums are deducted pre-tax at work, you cannot deduct them on your tax return. No double-dipping! Be sure to keep all of your receipts.”

33. & Job Search Expenses

You can deduct expenses associated with your job hunt, provided you’re looking for a new job in your current field.

34. But Don’t Get Carried Away

Some people try to take penny pinching too far. Check out these bizarre claims people have made to try and get out of paying taxes.

35. Itemize Charitable Gifts

So many people forget to do this, but it’s important. You can count charitable gifts made until April 18 of this year.

36. Or Do a Last-Minute Spring Cleaning

Say you didn’t get around to much charitable giving last year or you didn’t keep records — you could always procrastinate a little more by cleaning the house and donating things you don’t need. Don’t forget a receipt. (But then you really need to get on that tax thing.)

37. Don’t Skip the City Tax

Local and other state taxes, which you can check for at the bottom of W-2 forms, refer to a wage or income tax and may not be automatically deducted from your paycheck if you’re self employed. If you haven’t paid them, be prepared to cut a check. Here’s a handy guide to understanding your paycheck.

38. Contribute to Your IRA

Want a last-minute way to reduce your tax bill? Unlike most other tax-saving strategies, which have to be in place by Dec. 31, you can contribute to your IRA up until tax filing day if you haven’t already contributed your maximum for 2016. As TurboTax notes, for example, you can contribute $5,500, the maximum amount for 2016, and save as much as $1,925 in taxes if you’re in the 35% tax bracket.

39. Don’t Overlook Credits, Either

The IRS estimates that four out of five taxpayers are eligible for the earned income tax credit but don’t take it. A tax pro or software can help you determine if you qualify.

40. Keep In Mind Things Change From Year to Year

Just because you got deductions last year or didn’t qualify for credits last year doesn’t mean the same is true for this tax year. Take time to think about what changed.

41. You May Not Have to File a Tax Return …

You’re not required to file a tax return if you make less than a certain income threshold, which varies, based on a variety of factors.

42. … But It’s a Good Idea to Double-Check

Even if you made less than the income threshold that applies to you, don’t ignore tax season completely. “If they had federal taxes taken out of their paycheck or qualify for the earned income tax credit, they may have a refund coming,” Greene-Lewis said of taxpayers.

43. Get a Past Year’s Refund You Forgot to Claim

You have three years to claim a refund.

44. Think About the Best Way to Use Your Refund

Need some motivation to get your taxes done? The average tax refund for tax year 2015 was $3,120. You can finally buy that thing you’ve wanted to splurge on, pay down debt, or even use the cash influx to help yourself build credit.

45. Consider Adjusting Your Withholding

Getting a big refund isn’t necessarily a good thing. Here, we explain why you may not want a big check back from the government every year.

46. Hold Onto Your Paperwork

IRS audits generally go back three years but can potentially reach back six. Keep a copy of your return in a safe place. You may also want to hold onto W-2s if you’re planning on applying for a mortgage any time soon.

47. You Can Make Amends

If you made a mistake in your rush to file, you can amend your tax return. You won’t need to do this for math errors (the IRS can fix those), but you’ll have to file a Form 1040X if your filing status, number of dependents or total income is wrong or if you forgot to claim a certain exemption or deduction.

48. Make a To-Do List

Write down everything that gave you trouble this year or deductions you weren’t sure you could get because you didn’t document them. Maybe you won’t make the same mistake next year.

49. Get a File Folder

For storing all those receipts and documents you forgot to organize this time around.

50. & Set a Calendar Reminder

So you don’t end up in this situation again next year.

Image: elenaleonova

The post 50 Things to Know If You Haven’t Done Your Taxes Yet appeared first on Credit.com.

Can I Deduct Work Clothes on My Tax Returns?

It's the answer you get to a lot of tax questions: It depends.

Q. I’m thinking of taking a new job and I would have to wear suits every day. I own one suit. Can I deduct the costs as necessary and unreimbursed? 
— Working Joe

A. Congratulations on the job.

Your question is a good one, but it’s not as simple as you’re hoping.

The IRS under certain circumstances allows employees to deduct unreimbursed business expenses, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

“These expenses are subject to a 2% limitation,” Kiely said. “This means if your unreimbursed employee business expenses are greater than 2% of your adjusted gross income, you can deduct the amount that exceeds 2%.”

According to IRS Publication 529, “Miscellaneous Deductions,” you might be able to deduct the following expenses:

1. Business bad debt of an employee.
2. Business liability insurance premiums.
3. Damages paid to a former employer for breach of an employment contract.
4. Depreciation on a computer your employer requires you to use in your work.
5. Dues to a chamber of commerce if membership helps you do your job.
6. Dues to professional societies.
7. Educator expenses.
8. Home office or part of your home used regularly and exclusively in your work.
9. Job search expenses in your present occupation.
10. Laboratory breakage fees.
11. Legal fees related to your job.
12. Licenses and regulatory fees.
13. Malpractice insurance premiums.
14. Medical examinations required by an employer.
15. Occupational taxes.
16. Passport for a business trip.
17. Repayment of an income aid payment received under an employer’s plan.
18. Research expenses of a college professor.
19. Rural mail carriers’ vehicle expenses.
20. Subscriptions to professional journals and trade magazines related to your work.
21. Tools and supplies used in your work.
22. Travel, transportation, meals, entertainment, gifts and local lodging related to your work.
23. Union dues and expenses.
24. Work clothes and uniforms if required and not suitable for everyday use.
25. Work-related education.

No. 24 on the list is the one we’re talking about.

You can deduct the cost and upkeep of work clothes if you must wear them as a condition of your employment and if the clothes aren’t suitable for everyday wear.

“The second requirement is the stickler of why most workers can’t deduct their work clothes,” Kiely said.
Workers who may be able to deduct the cost and upkeep of work clothes include delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes and transportation workers.

Musicians and entertainers can deduct the cost of theatrical clothing and accessories that aren’t suitable for everyday wear, Kiely said.

Interestingly, he said, work clothing consisting of white cap, white shirt or white jacket, white bib overalls and standard work shoes, which a painter is required by his union to wear on the job, isn’t distinctive in character or in the nature of a uniform. Similarly, the costs of buying and maintaining blue work clothes worn by a welder at the request of a foreman aren’t deductible.

Kiely said you can deduct the cost of protective clothing required in your work, such as safety shoes or boots, safety glasses, hard hats, and work gloves. Examples of workers who may be required to wear safety items include carpenters, cement workers, chemical workers, electricians, fishing boat crew members, machinists, oil field workers, pipe fitters, steamfitters and truck drivers.

“Unfortunately for you, suits, white shirts and ties are for many ordinary street clothes and are suitable for everyday care,” Kiely said. “You can wear business attire to weddings, funerals or church on Sundays.”

Image: eclipse_images

The post Can I Deduct Work Clothes on My Tax Returns? appeared first on Credit.com.

8 Crucial Tax Tips for Millennials

tax_tips

As a millennial, you might have a surprisingly complex tax situation. Owing student loans, working multiple side hustles, and investing at a young age are all complicated scenarios come tax season.

Because of this, filing your own taxes often comes with added stress and unknowns. To help streamline this chore, here are eight tax tips for filing taxes when you have multiple streams of income and various financial responsibilities.

1. Don’t Miss the Tax Deadline

The most important part of filing your taxes is doing it by the deadline. The IRS doesn’t mind if you need more time or you don’t have the funds to pay the entire tax bill right now, but you must take the proper steps to alert them.

Decide which route to take: Either file your taxes completely, request an extension, or apply for a payment plan. Whatever you do, don’t ignore the situation and hope it will just go away.

If you miss the tax deadline without requesting an extension, you could be subject to penalties, interest, and late fees.

2. Choose the Right Tax Software

If your tax situation is fairly simple, you may feel comfortable filing your own taxes using a DIY tax software program. There are many reputable programs available, so shop around to find a good deal.

You may even qualify for free filing services. If you earn less than $64,000 a year, the IRS offers free software to help you file your taxes at no charge.

3. Write Off Side Hustle Expenses

Sure, you know how to file taxes for the income from your day job. But if you also earn money through a side hustle, you may have extra considerations.

For example, you may be able to write off certain expenses you incurred through your side hustle. If you purchased equipment or office supplies, these costs can be deducted on your tax return. Doing so reduces your taxable income, meaning you would owe less to the government.

4. Maximize Education Tax Savings

If you have student loans, you could save money come tax time. Nearly all education costs, whether it’s interest paid on your student loans or additional classes you’ve taken for continuing education requirements, are tax deductible. See a full list of education credits and deductions here.

List out all of your higher education expenses to see which ones you qualify for. If you’re unsure, speak to a tax professional who can offer additional tax tips, or follow the prompts in your tax software.

5. Inquire About the Saver’s Credit

The longer you wait to start saving for retirement, the less time compound interest will have to work on your behalf. To encourage people to stash away money in a retirement account, the IRS offers a tax credit called the Saver’s Credit.

The Saver’s Credit is often overlooked, even by tax professionals, but it can greatly reduce your tax bill at the end of the year.

The amount of the credit is 50%, 20%, or 10% of your retirement contributions up to $2,000 (or $4,000 if married filing jointly). The amount you qualify for depends on your adjusted gross income.

6. Deduct Job-Hunting Costs

Did you know that you can deduct any costs related to hunting for a new job? It’s true. If the new job is in your current career field, you can claim this tax deduction. Job search costs that you may be able to claim on your taxes include:

  • Resume copies
  • Dry cleaning
  • Employment agency fees
  • Certifications or classes
  • Business travel expenses

7. Block Off Time to File

Scheduling time to actually file your taxes is one of the most important tax tips. Block out time in your calendar to work on your taxes so you don’t have to rush through the process. Pretend it’s a regular appointment, and vow to keep it no matter what else comes up.

The tax filing process may take a few hours, so it’s not something you want to save until the last minute. Schedule time in your calendar sooner rather than later so you don’t feel as stressed.

8. Double Check Your Calculations

Even the smallest calculation errors can prove to be big mistakes when it comes to your taxes. Take time to double check your work: Have you listed all the deductions and credits you qualify for? Did you include all your income sources from various jobs? What about your higher education expenses and retirement contributions?

Nearly all DIY tax programs come with built-in features to ensure that your tax information is correct. The tax software will make sure your math is correct, but nothing is better than your own two eyes — especially when inputting your Social Security number, address, income figures, and expense costs.

Doing your taxes is never a fun task, but taking the time to do them correctly can save you big bucks. Educate yourself on the deductions and credits you may be eligible for and lean on free resources to help you file.

(Editor’s note: Tax season is always full of scams. You can use these tips for protecting yourself from taxpayer identity theft.)

Image: AleksandarNakic

 

The post 8 Crucial Tax Tips for Millennials appeared first on Credit.com.

Business Credit Card Fees That Are Tax Deductible

Here are some business tax write offs to keep on your radar.

Many of us use credit cards every day. We earn rewards points and make shopping and paying for goods easier through the convenience of not having to carry around cash.

Those same perks hold true for business cards as well. But if your business credit card has expenses and fees attached to it, do you know which of those are tax deductible? If you don’t, you’ll be happy to learn that it’s actually quite a few. It turns out that some of the best business credit cards are a lot better at helping you get a break on your taxes than personal cards. In fact, nearly every fee that you incur on your business card can be written off.

Annual Fees

Annual fees on a business card are tax deductible. This may be a great way to justify getting that card with the steep annual fee that also has amazing rewards. Yes, you can write it off, but keep in mind that the primary use of the card needs to be for business purposes and not for personal use.

Late Fees

Hopefully you’re not incurring late fees on your credit cards, but mistakes happen and you sometimes forget to make a payment. Those fees can be written off for your business taxes. Of course, it’s always best to call the company and explain you simply forgot and ask if they can waive the fee this time; saving $35 is almost always going to be better than claiming a $35 tax deduction.

Interest Charges

Again, in an ideal world you won’t be paying interest on any of your purchases. But there are times when you need equipment, and there just isn’t enough cash in the bank to pay for it right away. Those interest charges are all tax deductible.

Swipe Fees

As a business owner, you pay the credit card company every time someone uses their card to pay you. These are always business-related expenses and fully tax deductible.

Miscellaneous Fees

There are sometimes other fees associated with using a credit card. For instance, do you need cash? Your cash advance fees are deductible (although most financial professionals still don’t recommend this expensive way of accessing cash).

Maximizing your Tax Deductions as a Business Owner

The best part about deducting credit card fees as a business owner is there is really no stipulation on how big your business has to be. In fact, if you use a personal credit card and incur expenses, you can deduct them (as long as they are business related). That’s great news for even those who have a side business.

If you think you’ve been leaving credit card-related tax deductions on the table, it’s a good idea to go through your card statements before filing your taxes and add up all the fees. You could reduce your tax liability considerably if you’re using your credit card, whether business or personal, for business use.

And don’t forget that you can track how your credit card spending is impacting your credit by checking your two free credit scores, updated every 14 days, at Credit.com.

Image: gradyreese

The post Business Credit Card Fees That Are Tax Deductible appeared first on Credit.com.

Congratulations! You May Be Getting a Tax Break

tax-break

When tax season rolls around, most of us are just relieved to get our paperwork in on time. Now, according to Wolters Kluwer Tax & Accounting, a software solutions provider for tax, accounting and audit professionals, there may be even more reason to rest easy: A sweet little tax break.

According to the firm, since the late 1980s the U.S. Tax Code has required that federal income brackets be adjusted for inflation each year. These inflation adjustments were added to the Internal Revenue Code in recent years, and now over 50 other inflation-driven computations, as the firm describes them, are required to determine deduction, exemption and exclusion amounts, along with the 40 separate computations used to adjust the tax brackets for inflation each year.

Now, based on the Department of Labor’s inflation figures for the 12 months between August 31, 2015 and August 31, 2016, the firm is projecting that taxpayers will “experience modest savings” when filing their 2017 taxes compared to 2016. Here’s a closer look:

  • “A married company filing jointly with a total taxable income of $130,000 should pay less income taxes in 2017,” said the firm.
  • Marginal tax rates will have increased due to the income ranges bracketing, meaning “a single filer with taxable income of $50,000 should owe $22.50 less next year,” the firm concluded.
  • Meanwhile, “the additional standard deduction for those 65 years old and older, or who are blind, will remain at $1,250 for 2017, as will the $1,550 additional amount for single-aged-65-or-older filers,” the firm wrote.

Beyond that, the standard deduction for single, married filing jointly, and married filing separately filers is expected to jump in 2017 to $6,350, $12,700 and $6,350, respectively. That’s up from $6,300, $12,600 and $6,300. This change can bring about lower taxes, the firm explained, by “decreasing the taxpayer’s taxable income.”

According to Kelly Phillips Erb, a Philadelphia tax attorney who frequently blogs at Forbes, this is good news since “every time the bracket shifts even a little bit, all the taxpayers below that threshold benefit a little bit.” So with the standard deduction threshold rising, “the higher it is, the more people can claim it.” Two-thirds of taxpayers already take advantage of the standard deduction, she added.

Taxpayers should also consider how stagnant incomes — those that haven’t increased with inflation — can play a key role in their taxes this season. “If your income stays flat, which most people’s tend to do, but the tax breaks go up and the brackets shift up, you’ll get to trim off a few dollars from your taxes,” Erb said. Put another way, “you’re benefitting from the fact that the tax brackets are going up while your income is staying the same.”

As you gather your taxes together, it’s a good idea to spend some time researching some of the ways you can maximize your refund. You’ll also want to be wary of filing your taxes with accountants who aren’t on the up-and-up and, of course, to pay your taxes on time. Unpaid taxes can ultimately lead to a lien, which can hurt your credit. (You can view two of your credit scores, updated every 14 days, for free on Credit.com.)

Image: Georgijevic

The post Congratulations! You May Be Getting a Tax Break appeared first on Credit.com.