Did you know that ol’ Uncle Sam collected more than 3.4 trillion in revenue from taxes during the 2017 Fiscal Year? Since black folks account for 6% of the nation’s income, a significant portion of that revenue comes directly from our pockets.
Reversely, the IRS issued more than $347 billion in tax refunds which can go directly INTO your pockets. Whether you owe or will receive a refund, tax filing season is quickly approaching its end. If you find yourself to be one of the millions of procrastinators who wait until the last minute to secure needed documents and begin this grueling task… don’t worry we have you covered!
AspireTV spoke with Jasmine Cooper, an accounting and auditing professional with 10+ years experience in financial services and Matice Morris, a Retirement Plan Specialist, on tips geared directly towards Blacks on how to navigate the filing process and what to do to alleviate your tax burden.
1. Your “Side-Hustle” Is A Business!
Do you do hair on the side? Or maybe tutor students for extra cash? Uber or Lyft driver? A “side-hustle” can be any hobby or work that you occasionally do that takes up a relatively small amount of your time. Take advantage of the gig economy we are in and use allowable deductions to trim your tax bill. Make sure you maintain excellent records of business expenses.
2. Make an IRA contribution
An IRA, otherwise known as an Individual Retirement Account, allows you to save money for retirement with tax benefits. Traditional IRA contributions are tax deductible. You can make a contribution to your IRA up until the 2019 tax-filing deadline- April 15, 2019.
3. Tax Credits and Deductions
Remember to take advantage of all available tax credits and deductions. A tax deduction is the amount you are allowed to subtract from your adjusted gross income, which makes your taxable income lower.
The lower your taxable income, the lower your tax bill. Understand the difference between refundable credits and non-refundable credits. Refundable credits increase the refund, whereas non-refundable credits just apply directly to amount of taxes owed, but you do not get anything additional refunded to you.
- Child Tax Credit: The Child and Dependent Care Credit is limited to a range of 20% to 35% of $3,000 for one qualifying child or dependent under age 13 or $6,000 for two or more qualifying persons, depending on the taxpayer’s adjusted gross income.
- Student Loan Interest: You can deduct up to $2,500 from your taxable income if you paid interest on your student loans.
For more information, take a look at the examples listed by the IRS.
4. File For An EXTENSION.
If you’re finding yourself overwhelmed as the tax-filing deadline approaches, know that there are options. Filing for an extension is relatively easy, free, and you can do it by filing IRS form 4868 the only requirement is it must be filed no later than midnight on April 15, 2019.
5. Electronically File Your Taxes
We do everything online from making mortgage payments to ordering groceries, so why not transfer that simplicity to the not so simple process of filing your taxes? The number of people that opt for electronic filing (e-filing) increases every year, chiefly because it helps to facilitate the process and quicker returns for tax refunds.
Admittedly, math is not a strong point for many and filing online helps taxpayers avoid mistakes by doing the math. It guides filers through each section of their tax return. The software uses a question-and-answer format that makes doing taxes easier. Also, filing electronically eliminates being caught up in the storm of procrastinators who will be at the post office.
Tax law and regulations are complex and subject to change – this article is not an extensive listing and may not be applicable to every individual. For complete instructions consult a tax advisor. Please note the tax filing deadline is April 15, 2019 (Or April 17, 2019, if you live in Maine or Massachusetts).