We all want to get the most money possible out of our income tax returns. That statement seems simple enough, doesn’t it? However, it means different things to different people. Your individual financial situation plays a big part in what your overall tax strategy should be. When you work with a professional tax preparation service, you’ll get the counsel you need to make these decisions. Here at our CPA firm, we often use the following information to help our clients get the best results possible whenever they file a tax return.
First, know what your taxable income is. Your tax burden is based on what qualifies as taxable income. Your taxable income isn’t the same as your take-home pay or your gross income. Understand this concept then make adjustments to reduce it—and the taxes you’ll owe.
Next, know what’s being withheld. This is the amount of money that’s held out from your check to pay your taxes. If you have too much withheld, you’ll get a refund—also known as an interest-free loan to the IRS. Withhold too little and you could owe Uncle Sam on tax day. A tax preparation professional will help you get as close as possible to breaking even.
Now it’s time to look at your deductions and credits. Knowing what you qualify for can save you big bucks. A deduction allows you to reduce your taxable income. This includes things like mortgage interest and charitable giving. Credits will reduce your tax bill by a certain dollar amount. There are credits for expenses like child care and installing energy efficient components at your home.
There’s a lot to figure out when you sit down to do your taxes. The good news is that you don’t have to do it on your own. John S. Curtin, CPA Chartered is here to help. We offer tax preparation for individuals that’s accurate and thorough. We can also help you develop a winning strategy for your overall financial health. Contact our Ellicott City, MD office today to get started.