While we all are worried about filing the tax returns with the best possible audits, most of us are also taking a closer look at the tax benefits and deductions. Tax deductions are important for taxpayers as these amounts can be directly deducted from the gross income. Right from getting the best investments to saving the receipts of health insurance premiums, smallest of these expenses can save you a lot more during your tax filing. Let us take a look at some of the tax deductions or benefits that you did not know that existed.

Health insurance premiums
Medical expenses can cost you a fortune and therefore, there are provisions that help in saving tax with the health insurance premiums. The taxpayer needs to itemize the medical expenses and mention the same during the tax auditing. In order to benefit from the health insurance premiums, the deductible medical expenses should be more than 7.5% of the gross income. If in case the taxpayer is self-employed and has paid for his or her medical expenses themselves, then the complete premium paid can be considered for claiming the tax benefit. The amount so deducted is considered from the gross income and not as an exclusion under itemization.

Sales taxes
Sales tax can also be deducted from the federal income tax. This provision can be a big money saver in the states that do not have arrangements for their own income tax. If you are claiming your tax benefit under the sales tax, then the item needs to be mentioned under claim deduction. One can refer to the official website of IRS to know more about the savings on big purchases and tax benefits under the sales tax.

Charitable gifts
These gifts make for a great money saving option under the federal income tax. It is useful to save the receipts and itemize them once the tax audit takes place. For instance, if you are baking cakes and using the funds to pay for a charitable organization, the cost of ingredients can be used as tax deductions.

Investments
Investments are one of the core benefits of tax refunds. Some of the tax deductions under investments include individual retirement agreements, capital losses, the sale of a home, etc.

Other tax benefits are:

• Cost of the babysitter
• Lifetime learning credit
• Unusual business expenses
• Self-employed social security

So, if you are looking for more information on tax benefits and deductions, visit the official website of IRS for a detailed list.

As a taxpayer, you may come across tax deductions and tax credits as a part of tax benefit. These terms might be alien to you, but one needs to understand these well to get benefits and deductions. The tax deductions lessen the taxable income and the final value is computed on the marginal tax rate of the individual. The marginal tax rate increases with the rise in the income of the taxpayer. Tax credits, on the other hand, reduce the taxes directly. Therefore, these credits do not rely on the rates of the taxes. However, the value of the credit depends on the taxpayer’s tax liability.

Nonrefundable tax credits
If you are wondering if the tax benefits can bring down the tax to zero, then there are nonrefundable tax credits to help you out. Most tax credits are nonrefundable. So, the income filers who fall under the low-income bracket do not fully benefit from the nonrefundable tax credits.
There are other tax credits that can be partially or fully refundable. If the tax liability value surpasses of an individual, then the surplus amount is paid back to the income tax filer.

Tax benefits of education
Taxpayers can avail benefits of education through tax credits for higher education.

Who is eligible for an education credit claim?
There are various criteria that let you avail the claim under education credit, but one must meet the following requirements to benefit from the same. Take a look!

• The qualified education expenditures for a higher education is paid by you, your dependent or a third party
• An eligible student must be registered at a qualified educational institute
• The enrolled student must be either you, your spouse or a dependent whom you have mentioned while filing your tax returns

Here are some of the tax deductions under education.

• Qualified education expenditures
• Qualifying work-related education
• Education to improve or maintain skills
• Tuition and fees deduction
• Student loan interest deduction
• Qualified student loan
• Education required by law or by employer
• Lifetime learning credit

Tax benefits of homeownership
One of the advantages of homeownership is that the credited rental income does not qualify under the taxable income bracket. But, the property holders would exclude the property tax payments and mortgage interest with other expenses from the income that is taxable. Also, the homeowners may deduct the capital gains from the sale of the home but up to a defined limit only. However, all of these tax benefits are a boon to those who are under the high-income tax brackets and not others. Therefore, the tax benefits and deductions under homeownership include:

• Property tax deduction
• Imputed rent
• Profits from home sales

While some years back filing tax returns was a daunting task that would involve burying oneself into giant stacks of paper, today all thanks to the advent of the internet era, things have changed for the good.
Today, you can file your taxes online if you have all the necessary documents. All you got to do is to go to the Internal Revenue Service(IRS) website, the agency that officially collects the nation’s tax, and then fill the tax form.
In this article, you will learn why you should ditch the old manual tax filing system and embrace the new system of e-filing taxes:

• Saves time: E-Filing taxes saves a lot of time. You can file your tax returns in half the time you once took to do it manually. The whole filing process and preparation of tax speeds up when you do it online.
• Permanent in nature: One of the best things about e-filing taxes is that the records you feed the system will stay there forever. This means that you can return to the records a year later and still find the data. It saves you the trouble of going through the filing cupboards and stacks of paper.
• Precise: There is very little that can go wrong while filing your tax returns online. Since you will be using the tax software to fill the forms, it means that you do not need to worry about the math calculation going wrong or which form you are required to fill next.
• Quick tax refunds: If you need one reason why you should file your tax returns online, then this should be the reason. E- filing taxes gives you quick tax refunds. With the option of ‘Direct Deposit,’ you receive the funds directly in your account within three weeks or less.
• High security: When it comes to e -file, concerns about your tax data getting leaked is obvious. But the good news is that your worry is unnecessary. The tax software, tax preparers, and the tax software developers are not allowed to disclose any data as they are all bound to the same confidentiality rules that apply to manual tax filing system.

You already know that filing of taxes has many benefits. You get a refund on your tax if you later claim the returns. E-filing taxes has made the process of filing of taxes easy and smooth.

In many cases, small business owners do not know that there are a few deductions they are eligible for, and they miss out on tax-efficient ways of retirement savings and business management. Although the amount of tax that a small business has to pay depends on the ownership and type of business, it is possible to reduce the amount of small business taxes. Here are a few ways for small businesses to pay less tax.

• Give tax-free fringe benefits to employees: If an employer pays more wages to employees, the employment tax expenditure paid by the business will also increase. By paying for fringe benefits for employees, a business can save on this expenditure. Many fringe benefits can exempt a small business from paying additional taxes. These benefits help to save on the taxable income of employees. The following are included in tax-exempt benefits: long-term care insurance, health benefits, disability insurance, group term life insurance, educational assistance, transportation benefits, dependent care assistance, and meals provided to employees.
• Restructure business to an LLC: Most small businesses are initially set up based on a partnership or sole proprietorship. Such businesses taxes are also applicable and have to be paid as a part of the small business tax. This is because Federal Insurance Contribution Act tax applies to any salary earned by an employee (in a small business based on sole proprietorship, the owner is treated as an employee as well). Restructuring a business to an LLC (Limited Liability Company) helps to divert a major part of the business income to distribution channels. FICA taxes are not applicable to this part of the business income, and the business can save a lot on taxes.
• Channel profits towards retirement plans: If a small business has limited number of employees, establishing retirement plans for employees can be beneficial for an employer. A small business can qualify for tax credits by setting up employee retirement funds. The profits of the business can be channeled to the employer’s contribution towards these retirement plans. The contribution made by an employer towards employee retirement plan is tax deductible. With a retirement plan such 401(k) or any simple tax-deferred retirement plan, employees can use the flexibility and option to save for retirement and employers can save on overall small business taxes.

These are just a few ways to save on small business taxes. By taking advantages of opportunities and tax breaks, small businesses can easily lower their overall taxes.

Many citizens today file or plan to file their taxes online. There are many unpaid and paid websites where you can do so.
The Internal Revenue Service (IRS) is the agency that collects the taxes of the whole country. You can file your federal taxes, which is the tax collected by the government, as well as most of the state’s tax returns on the IRS website.
E- filing taxes is an easy procedure if you have all the necessary documents handy. For e-filing taxes, you need to follow these simple steps:

• Keep the documents ready:  You need the W-2 form, income statements, health insurance coverage documents, money spent on charity and interest statements to file your tax returns. Make sure that you keep these documents handy before you start filling the form.

• Know your type of tax returns: -Once you have the documents ready, see if you fall under the free tax return preparation. If you are a family member of military men, people with disability, or a senior citizen you get leeway on the tax returns. Also, if your Adjusted Gross Income(AGI) is below $60,000 per year, then you can avail the IRS Free File Software Program.

• Keep the finances ready: It is expensive to file the tax returns online as compared to the traditional way. It takes around $20 up to $80 to file a federal tax return. If along with the federal taxes, you want to file the state taxes, then you will need an additional $30 to$50.

• Fill the form correctly: Use the IRS e-file website to fill the correct tax form.

• Do the math: Calculate your income, investment, and taxes. Check for the tax deduction and credit by showing proofs that you donate to charity and have childcare expenses.

• File the tax returns carefully: If you have a child depending on you, then you can reduce your taxes by claiming the child as a dependent.

Best tax software companies for e-filing taxes
For those with an AGI of $60,000 annually, you must use the benefits of the Free File software, which is one of the best unpaid tax software available in the market. This software is a partnership effort of government and private firms that allows people with a low-income to file the federal taxes for free. H&R Block, TurboTax, TaxSlayer, and Intuit are the other popular tax software that you can check out.

While e-filing taxes, choose an e-file provider that is authorized by the IRS. By doing so, you can be assured that the e-file provider is licensed to transfer your tax returns to the IRS electronically.

Tax preparation is one of the most challenging tasks every civilian has to go through. We often neglect the importance of maintaining our papers in order since it allows us more time to prepare our taxes, which otherwise is wasted in sorting out important documents. So, if you wish to make tax preparation a painless endeavor, here are some amazing tips and advice for you to adhere to since they would help regulate the entire process of preparing taxes.

• File as soon as possible
  One of the best tax tips and advice you would ever receive would be to file your tax returns as soon as possible. The reason is that the sooner you file your returns, the faster your refunds will be processed. If you file your tax returns at the right time, it would give you more time to deal with other issues that might come up. In addition to this, if you file your returns right away, it would become difficult for fraudulent entities to file false claims under your name.
• Increase your retirement contributions
  It is common knowledge that every employer offers a 401(k) or other pension plans to their employees. If this is the case, you should try to contribute the maximum amount allowed by these policies if the employer matches your contribution. Contributing the maximum amount allowed ensures that the money which would have otherwise been deducted as the tax would become useful as a part of your retirement plan. If your employer doesn’t offer a retirement plan, you can contribute to the traditional Individual Retirement Account (IRA) or a Roth IRA, whichever you consider beneficial. This is one of the most followed tax tip and advice.
• Adjust your withholding
  It is important for you to adjust your withholding. As per the new law, the IRS has to hold all the refunds on the returns till February 15. It is done with the intention of detecting and preventing tax frauds. So, you will have to check your year-to-date withholding and re-consider changing the taxes that you have withheld in case you are expecting a large refund. This process has to be undertaken if you have decided to claim the earned income tax or EITC. So, to adjust the amount of tax withheld, fill up the form W-4 and submit it to your employer.
• File to receive your income tax credit
  As per the IRS records, one out of every five workers does not claim the valuable income tax credit that they have earned. It is imperative that you seek the income tax credit since it is your money which you would be claiming. So, to receive this income tax credit, ensure that you file a return for the same.

With the tax season right around the corner, most businesses and individuals are preparing to file tax returns and taking stock of their profits, losses, and income. For small businesses, all these are included in personal tax returns based on the salaries of their owner/owners. Small businesses are single-member LLC owners and sole proprietors and their taxes are filed under Schedule C along with Form 1040.

For individuals, the highest tax rate is 39.6%. This depends on an individual’s income, and a small business will have to pay taxes on this percentage. Adding local and state taxes, small business taxes will go up to nearly 50%. This is quite a high percentage of tax a small business will pay when compared to a corporation who would be paying at the tax rate of around 35%. With their limited scale and profits, small businesses may have to incur high taxes unnecessarily. Here are a few simple ways to save on small business taxes.

• Use tax-free methods to save on taxes: By utilizing tax-free benefits such as retirement plans and medical coverage that is offered to employees, it is possible to save on small business taxes. It is also possible to save on small business taxes on loans taken on a zero or low-interest basis. Businesses have to report loan interests that are below IRS-set rates; however, due to the prevailing low-interest rates, loans do not cost too much.
• Use accountable plans: An accountable plan is a plan used by employers to reimburse employees for their miscellaneous costs such as entertainment and travel. Such accountable plans are in accordance with the requirements of IRS. Accountable plans let a small business to deduct this cost from the total expenditure and not include in the total employee income. This lowers the total taxable income of the business and saves employment taxes of the company. Accountable plans help not only employers but also employees to save on taxes.
• Use carryover deductions: Based on their taxes, small businesses can be eligible for credits and deductions based on their taxes. Since certain limitations are imposed on such credits, a business cannot utilize these credits completely in a current financial year. Such credits and deductions can be carried over to the consecutive financial years. It is essential to keep track of such credits and deductions that are carried over to the next financial year. This can help in using the benefits of such carryovers. Such carryovers are usually earned through capital losses, general business credits, charitable contribution deductions, home office deductions, and net operating losses.