Have Your Pi and Eat it Too: Five Mistakes to Avoid and Boost Your Tax Refunds

Today is Pi Day, an annual celebration on March 14 (3.14), of the first three digits of Pi. In our own celebration of Pi Day, we offer you five ways to avoid mistakes and boost your tax refund, thus having your Pi and eating it too.

       1. Claim all of your dependents. Be sure to think outside the box on this one — if you provide more than half of your parents’ support or a relative and their income is under $4,150 each, then you can claim them as dependents on your tax return, even if they don’t live with you. Providing over half of your boyfriend or girlfriend’s support? You may be able to claim them as a dependent too, though non-relatives are required to have lived with you all year to be eligible. Under the new tax law, you can no longer get the dependent exemption which was $4,050 in tax year 2017, but you may be able to lower your taxes with the new credit of $500 for non-child dependents.

       2.  Claim the child care credit, if you qualify. Don’t just accept that child care is expensive and leave it at that. If you are working or actively seeking work and you pay child care for your dependent under age 13, you can claim the Child and Dependent Care Credit. This credit is a dollar-for-dollar reduction of your taxes, based on your child care expenses up to $3,000 for one child or $6,000 for two or more children. The credit ranges from 20 to 35 percent of your child-care expenses, depending on your income. Nursery school, private kindergarten, after school programs and day care are all qualifying expenses.

       3.  Deduct your tuition. Don’t overlook this important tax credit. Education expenses can be tax deductible if they maintain or improve skills required in your employment. Even if you are not going for a degree or taking classes to improve your job skills, you may still be able to take a deduction for college classes. The Lifetime Learning Credit is worth 20% of all your tuition expenses, up to $2,000 in tax credits, for you, your spouse or on behalf of your child who is claimed as a dependent.

      4.   Save for retirement. The biggest mistake most of us make is not saving enough for retirement. Contribute all you can to your 401(k) plan or 403(b) plan at work. If you don’t have a retirement plan available to you, be sure to contribute $5,500 to an IRA (plus another $1,000 if you are 50 or older). You’ll save on your taxes now and benefit during your retirement years.

       5.  Don’t miss big credits. There are a few credits that can really boost your tax refund, but many taxpayers who are eligible for the credits don’t claim them. The Earned Income Tax Credit is a huge refundable tax credit that can be worth up to $6,431 for a family with three or more kids, but the IRS reports only one out of five taxpayers who are eligible take it. The Saver’s credit is also another little known credit that eligible taxpayers miss and it can be worth up to $1,000 if you’re single and up to $2,000 married filing jointly. The Saver’s Credit is an additional boost you get just for investing in your retirement.

Don’t worry about knowing these tax rules and missing any of these deductions and credits. TurboTax will ask you simple questions about you and give you the tax deductions and credits you are eligible for. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent with an average 15 years-experience to get your tax questions answered. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can review, sign, and file your taxes.