There’s a wealth of deductions that couples and parents of children can take to lessen their tax burden. Single people aren’t typically so fortunate, but there are ways that singles can utilize to reduce their monetary burden at tax time.
A large tax refund is a good indication that an individual is having too much withheld from their paycheck. The solution is to file a new W-4 form with their employer. By reducing withholdings individuals will receive more money in each of their paychecks.
A health care flex plan diverts money from a paycheck into an account that an individual can use to pay medical bills. Neither income taxes or Social Security taxes need to be paid on the money. The maximum contribution each year to a health care health plan is $2,500.
For singles that are looking for a new position in the same line of work, job hunting expenses can be deducted. That includes transportation, food, lodging and other associated costs, not to exceed 2 percent of adjusted gross income. Moving costs can be claimed if a new job is more than 50 miles farther from the individual’s home. If the individual is using their own vehicle, they can claim 56 cents per mile, along with tolls and parking fees.
Taxes on stock received as a fringe benefit can be paid at the time of the stock’s value rather than until the restrictions disappear. The benefit is that the tax rate could be far more after the stock vests.
Individuals that are making extra money at home through a side hustle can deduct a percentage of the space as a home office. However, individuals that make more than $400 may be taxed at the increased level reserved for the self-employed.
For singles that have been sharing their home with a family member of friend during the pandemic, if they’ve been providing more than 50 percent of that person’s living expenses, they can claim them as a dependent. Many people didn’t receive one or more of the three stimulus payments that were distributed by the federal government. For others, the full amount wasn’t received. Anyone that experienced one of those situations can claim the amount as a tax credit.
At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs. We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!