May 18, 2021

A majority of individuals have a portion of their income go to taxes when they file. Those who are looking for a way to legally decrease or eliminate their tax bill altogether, should take advantage of certain tax perks when filing their tax return.

Look into deductions

Tax deductions are a great way for taxpayers to have more money in their pocket and reduce their total tax bill. Individuals who qualify for tax deductions, should take advantage by including them on their tax return. Utilizing tax deductions will reduce the total amount of income that was earned throughout the year which could reduce your tax bill or even get you a refund.

Hold onto winning investments

If you invest in stocks, it is important to understand how it can affect you when you file your taxes. If you are looking to reduce the total amount of taxes you may have to pay when filing your taxes, you my want to consider holding your stocks even if the price shoots up. If you hold your investments for over a year, you will be eligible for the long-term capital gains tax rates of 0%, 15%, or 20%.

Earn more qualified dividends

For those who are not ready to sell their stocks, there is another way to get the same rates you would get for long-term capital gains.

Qualified dividends allow individuals to bypass the higher tax rates that are associated with ordinary dividends. Qualified dividends also give individuals exclusive access to the 0%, 15%, and 20% tax brackets if they qualify for the following:

  1. The dividend must have been paid by a U.S. corporation or a qualifying foreign company.
  2. The dividends must be deemed as qualified in the eyes of the IRS and cannot be listed as a non-qualified dividend.
  3. You have held the stock paying the dividend for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date.

Look into credits

Taxpayers who know they will owe a tax liability should look into tax credits they may qualify for. The Earned Income Tax Credit could help individuals receive a tax refund after filing their return. For those who contribute to a qualified retirement savings account, you may also be eligible for a tax credit that could potentially wipe out your entire tax bill.

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.