Summer is no vacation for you or is it?
Tax season is never over. You have to be vigilant for tax benefits. For example, one of my favorite couples, Dr. and Mrs. Med, live in Nashville and they have three kids. Mom and Pop are employed as MD and pharmacist, so they must find something for the kiddies to do while the parents work. Summer camp is expensive. They typically owe taxes with their return. What can they do?
Here is how it works. If your child is age 12 or under and attends summer camp (not summer school) so you can work, you can take the dependent care credit. The credit is 20-35% of the cost on up to $6,000 with two or more children. The percentage drops as adjusted gross income increases over $15,000. So even in this case where the parents make good money, they get to take a $1,200 tax credit – that is a credit, which directly reduces their taxes.
Withholding trap. Let’s look at another TRAP faced by Dr. and Mrs. Med and many hardworking couples. They can’t trust their employers’ withholding. There are two traps:
First, where a couple is both employed, their combined incomes push their taxes up but each employer is not aware and doesn’t withhold enough leaving them owing a sizable amount on their tax returns.
Second, on the other hand, a taxpayer that is deducting sizable itemized deductions, like real estate taxes, mortgage interest, contributions and more, can end up with a large refund, which you could have used to increase your monthly checks.
Tax advice: Try my Tax Mastery© program. With it, I can show you how to lower your taxes with those deductions and adjust your withholding so it matches your taxes. Likewise, my Tax Mastery© program tells you what the average deductions are for your income so you can avoid an IRS audit.