Counting Pennies

Can you believe is almost December?! As the end of the year draws closer, I always start thinking about taxes. I know most people don’t worry about this until April, but I work as a freelancer, so my taxes are higher (and more complicated), so I always start early. Even if you’re not there yet, here are some tips from Sally Herigstad, CPA, a certified public accountant and the author of “Help! I Can’t Pay My Bills” (St. Martin’s Griffin, 2006).

• Millions of dollars available through the Earned Income Tax Credit go unclaimed every year – about 25% of the amount people are entitled to. People don’t claim the credit because they don’t file a return, they think they don’t qualify if they don’t have children, or they can’t quite believe that the federal government wants to give them back more money than they had withheld from their taxes. This credit was created as a way to refund payroll taxes to lower-income working taxpayers.

• Many people don’t claim their children for the Earned Income Tax Credit because their ex-spouse is taking a dependency exemption for the kids. The EITC is much more generous if you claim your children, and it doesn’t matter if your ex takes the dependency exemption — as long as the kids lived with you. I know people who lost thousands of dollars in credits because they didn’t know this!

• If you get the EITC every year, you should be getting part of this year’s EITC in your paycheck every month. Almost no one does this, but they should. If you ask your employer, they can set it up for you. You need the money now, not next year!

Trackback URI | Comments RSS