Money Matters: Tax season tips
Tax season is just around the corner, with 78 days until the filing deadline. Financial expert Barry Bigelow joined Good Morning Northland to share essential advice for tackling taxes this year.
Barry explains that tax write-offs fall into two categories: deductions and credits. While deductions reduce the amount of income that is taxable, credits directly lower the amount you owe. “Credits affect the bottom line more meaningfully than deductions do,” Barry notes, making them especially valuable.
When it comes to business expenses, Barry advises understanding what the IRS deems “normal or ordinary” for your industry. For example, travel reviewers can deduct airfare and lodging, but everyday clothing wouldn’t qualify. Personal deductions, such as mortgage interest, medical expenses, and charitable donations, remain limited since the 2017 Tax Cut and Jobs Act.
Freelancers and side hustlers face unique challenges and should prioritize tracking expenses with apps like QuickBooks to organize deductions for technology, software, and other essentials.
Lastly, Barry highlights underused credits like the Earned Income Tax Credit and the Child Tax Credit, which can significantly reduce your tax bill. He also stresses the importance of accuracy, as errors like incorrect birthdates can impact deductions or credits.