Tax Tips: 3 Proven Strategies to Reduce Stress When Filing Taxes

A deliberate error can have lasting impact on your eligibility to claim EITC. Beware of scams that claim to increase your EITC refund. Scams that create fictitious qualifying children or inflate income levels to get the maximum EITC could leave you with a penalty. If your EITC claim was reduced or denied after tax year 1996 for any reason other than a mathematical or clerical error, you must file Form 8862, Information To Claim Earned Income Credit After Disallowance, with your next return if you wish to claim the credit.

To qualify as deductible, the entertainment expense must be an ordinary and necessary expense. It must also meet either the directly-related test or the associated test, as described below:

Choosing to file a joint tax return with your spouse can provide you with certain benefits. However, by filing jointly with your spouse, you are both legally responsible for the tax and any additions to tax, interest, and penalties that arise as a result of the joint return. This is known as being jointly and severally liable. Generally, if your spouse claimed improper deductions or credits, you are both held responsible for all of the tax due. This is true even if a divorce decree indicates that a former spouse will be responsible for any amounts due on previously filed joint tax returns.

Before few years e-filing is now common. E-filing allows a tax come back to be processed and obtained quicker which frequently leads to individuals finding their tax discounts faster. You may still find a number of individuals who do not feel comfortable e-fling their taxes even though e-filing has dramatically increased in popularity. These individuals tend to be focused on their information that is personal being transmitted on the internet. All tax software programs give the alternatives to users of e-filing their federal and state tax types or printing them out.

A second tip for filing your US expatriate tax return is to make sure your Foreign Housing Credit is adjusted for the country you live in. The rates vary from country to country which can drastically affect the end result, so it is extremely important to make sure that this is adjusted. As a US citizen living and working abroad, you may be eligible to deduct some of your housing costs from your income in order to save some money on your taxes. In order to qualify for this deduction, you need to meet the “bona fide residence test” or the “physical presence test.” This test ensures that you are indeed living and working abroad. The IRS allows this deduction because they recognize that you may need to spend more money on housing outside of the US. Generally, the deduction is for a maximum of $27,450 or 30% of your Foreign Earned Income Exclusion and you deduct this amount from your gross income for housing costs. As mentioned, this rate is adjustable depending on where you are living. For example, compared to living in the US, places such as London, Paris, Singapore, Hong Kong, Dubai and Perth all qualify for a much higher deduction rate than the standard rate due to the higher costs of living. By being aware of the changing rates associated with your country of residence, you could end up saving a lot of money!