How to Get the Most Out of Your Refund – Single Mothers
Paying taxes is unavoidable and therefore, it is desirable to pay your taxes before the deadline to avoid getting penalized. There are various tax forms which you have to deal with according to your requirements.
Many single mothers live paycheck to paycheck and do all that they can to get food on the table and keep a roof over their family's heads. When the annual tax refund comes around, many women use this as a chance to get current on late bills, or to finally pay them on time this month.
If you are willing to file 1040ez form online you should know first whether you can file it or not. Suppose you have unemployment compensation, wages or salaries, qualified state program earnings, or taxable fellowship grants or scholarships, then you are eligible for using this tax form.
There are also those single moms that use their refund to buy a large, unneeded item in order to curb feelings of inadequacy. You may feel tempted to spend the money on something extravagant. As a single mom it can be hard watching your kids go without when all of their friends seem to have it all. The temptation to splurge on your children and get them something that they really want might be overwhelming.
The most taxpayers consider IRS 1040ez to be the easiest form for several obvious reasons. It is simple to file because many typical adjustments to your income can be excluded. But there are some financial issues which may prevent you doing this form and some of them are capital gain transactions like sale of property and stock, IRS deductions, alimony either received or paid, and some taxable social security advantages.
Your goal with your refund should be to invest. You may be thinking that you don't know anything about investments, and that's OK. Investments are things that bring more money to you. That's why a high-priced item or paying off your bills on time are no good uses of your tax refund.
Another income tax savings program may exist in the form of employer-provided educational assistance programs. These allow you to receive help, usually in the form of a reimbursement, from your employer to cover some or all of the costs associated with your college education. Your employer gets the deduction for these expenses, but you receive the reimbursement money tax-free in most cases.
Lastly, you may qualify for a deduction for work-related education expenses, if your education costs were not reimbursed and you meet certain IRS criteria. To be able to deduct these expenses, you have to itemize your deductions on Schedule A and must have enough miscellaneous expenses to exceed two percent of your adjusted gross income. For all of the above tax savings, be sure to mention that you have education related expenses to your tax preparer or accountant at tax time. Keep good records of what is spent during the year for college and ask a lot of questions when you sit down to actually prepare your taxes.
Harris Smith is a personal finance writer interested in home equity line of credit Don't Miss Out!
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