Couple Money

Take Advantage of Tax Credits and Deductions

tax tips for couples

In order to produce the podcast and keep content up free for you, I work with partners so this post may contain affiliate links. Please read my full disclosure for more info.

This is a money making tip for the 50/50 Challenge.

As I mentioned the other week, I spoke to Bob Meighan, TurboTax’s Vice President and CPA, last week about ways to lower your tax bill and more.

We spoke about different scenarios for couples, whether they’re parents for the first time, homeowners, or taking a new job.

He also went over tax credit and deductions that you can take advantage of when you file you taxes next year.

The great things about using these credits and deductions is that you're maximizing what's already out there.

It's not about finding loopholes, it's legal ways to boost your refund or at least lower your tax obligations.

Tax Credits vs Deductions

Some people think that tax credits and deductions are the same. That’s not true; there are some subtle differences and knowing them can help you tremendously.

Tax deductions are slightly different because they reduce your taxable income, not the tax burden that you owe. Tax credits lower your tax bill.

Bob pointed out that the average refund last year was around $4,000. That can be a helpful windfall for many people in these economic times. To that end, it's important to know what you include with your tax filings.

Depending your own circumstances, you can qualify for various tax credits and deductions. I'll list a few of them here.

Becoming Home Owners

There are some pretty big tax breaks for home owners. The biggest one is the mortgage interest deduction.

Mortgage Interest Deduction

As a reminder, to deduct your mortgage interest you must itemize your deductions.

If you're interested in finding out the deduction limit and income phaseout for mortgage interest, please check IRS Publication 936 for more information.

Taking the mortgage interest deduction while paying down your mortgage makes sense; keeping your mortgage just for the deduction is not.


Did you know that there was a casualty loss deduction available? I didn't know, but Bob mentioned it with this year being filled with a couple of disasters in the United States.

It covers your total loss (minus $100 and whatever your insurance reimbursed you for). For those rocked by the crazy weather disasters this can be a huge relief.

This deduction is not only for homeowners, but they can benefit from this greatly with property damages.

Having Kids

For 2011 you can deduct $3,700 for each exemption on your tax return. That helps you as it will reduce your taxable income (though not your liability).

Child Care Credit

This credit can help you with dependent care. If you have pay someone to watch over your children, such as daycare.

The maximum you can claim with each child (provided they qualify) is $1,000. Bob also mentioned that some parents may not take advantage of the credit even if they qualify. They don't think summer camp qualifies even though it could.

Medical Expenses

You can deduct medical expenses whether you have kids or not, but it's easier to meet the AGI requirement when you take into account the family's medical and dental expenses. The IRS requires that your expenses exceed 7.5% of your adjusted gross income.

Looking over the IRS’ list of eligible expenses, I noticed a few that could apply to our family:

I feel better knowing we may see some of the money back in a few months.

Starting a Business

From the emails and chats in forums I know a good portion of you have a business. Many of you work from home to supplemental your main income.

Business Expenses

When we were speaking about it he pointed out that people aren't optimizing their home office deductions.

If you're entitled to it, then by all means claim it. Keep records and have everything documented and you should be fine.

Keep Estimated Taxes in Mind

Bob also mentioned that some people don't keep on top of their estimated taxes.

This important because not only will you be hit with a big tax bill when you file, you'll also incur penalties for being late. To help you keep these dates in mind, use calendar reminders to send in your payments.

Estimated taxes are due on an almost quarterly basis.

If your business involves blogging, I have a list of tax tips for bloggers that may help.

Thoughts on Tax Credits and Deductions

If you're looking for more posts about optimizing taxes, please check out TurboTax. I'm a contributing blogger over there and here are a few of my posts:

Exit mobile version