Unfortunately, many people tend to do little or no research on this topic, which often causes them to pay more income tax than they really owe. To help you avoid making such a mistake, this article will touch on some of the ways you get the most out of your tax return. Deductions, in a nutshell, are simply qualified expenses that reduce your taxable income. Examples include:. These are just a few of a long list of items for which taxpayers may baci a deduction if they are eligible. Available credits include the following:. If jow are eligible for these credits, they can substantially reduce or even eliminate the amount of tax that you owe and thus increase your refund. They can actually provide you shre a refund in some cases even if you had no tax withholding from your income for the year. Generally, you should itemize your deductions if it results in a lower taxable income than if you claim the standard deduction.
Is a guarantor loan a better option to loaning money to a friend?
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Is lending to friends or family a good idea?
)}After a couple of weeks of lower tax refundsAmericans have started to see a shift in their favor. For the week ending Feb. That’s a 1. While it’s important to remember that how much you receive or owe depends on your individual financial situation, if you haven’t filed yet, there are several things you can try to maximize your refund. Infamilies with children who are able to claim the Child Tax Credit CTC are likely to see the biggest how to make sure you get money back on taxesespecially if they live in low-tax states like Texas, Washington or Wyoming. Plus, many credits are refundableso you could get money even if you don’t owe the IRS. If you’re married, filing jointly won’t automatically earn you the largest possible return. A «marriage penalty» can affect couples when tax-bracket income thresholds, deductions or other credits aren’t doubled for married filers. Although the new tax laws eliminated the issue for many taxpayers, it still could affect you depending on where you live and how much you and your partner earn. Did you max out your IRA in ? Assuming you meet the requirements, the money you put into your IRA reduces your taxable income for the year. This only applies to traditional IRAs, not Roths. There are other restrictions as well, so read up before you contribute. Putting money in a health savings account, or HSA, can also lower your taxable income. To qualify for an HSAyou need to first have a high-deductible health care plan, and there are other restrictions. As with retirement savings accounts, you can contribute pre-tax dollars to an HSA and you’ll only pay taxes when you withdraw the money. And you can make a contribution right up until the the filing deadline on April Like this story? Don’t miss: Only 25 percent of Americans know this effective tax-saving strategy is legal.⓬
Rethink your filing status
Here are five tried-and-true ways to reduce your tax liability at tax time. Pay no more than you owe, or even increase your tax refund. While Americans may disagree on how the government spends their taxes, at tax time, many of us are looking for ways to pay no more than we owe — or even boost our tax refunds. These strategies go beyond the obvious to give you tried-and-true ways to reduce your tax liability. Choosing to file separate returns can have its drawbacks, such as losing certain deductions available to joint filers. You’ll need to weigh this carefully to maximize your refund potential. Also, both spouses must take either the standard deduction or itemize their deduction.
Take advantage of credits
Lending money to friend or family is only a good idea if you can afford it and you know you will get your money. You may just want to help someone you care about avoid high interest charges when loaning from a bank. But you have to put your financial wellbeing. If things went wrong, you could end up losing your money and your friendship. Ask yourself if you can afford to lend gt money. You need be okay without the money until they have repaid you in.
Remember, it could take them a while to repay the loan. You need to be absolutely sure they can afford to pay you. They may not be able to loan money from a bank because of a low credit score.
A low score could be the result of poor money management. Do not be afraid to ask them what they need the money. Lending money for a new boiler in the dead of winter is most likely okay.
Lending them money for a luxury cruise, less so. If they do not have much money coming in and are already struggling to pay their bills, another loan might not be best. If others have lent them money and struggled to get it back, you may want to be more cautious.
They borrow the ma,e from a traditional lender, but put you down as the guarantor. This means you’ll have to cover any payments they miss. You hack compare guarantor loan rates. You could lose out if you take money out of your savings or reduce the amount you are paying off your mortgage.
You can charge them interest to mitigate that loss. Otherwise, you’re essentially paying to lend them money. You do not have to charge them the same amount of interest as a traditional lender. Consider asking for the same amount you would have earned if the money had stayed in your savings account.
Make the agreement clear and legal with a written contract. It provides a record of the agreement should there be a dispute later down the line. You could get an independent witness to sign the agreement. For further protection, it may be worth hiring a solicitor or speaking to Citizens Advice. There will be a record of the payment if you transfer it by bank transfer or cheque. There will be no record if you just give them cash. To ensure your friend repays you as per the agreement, they need to set up a standing order or direct debit from their account to yours.
You can ask your building society or bank to confirm this has been. This may sound formal, but it’s necessary to protect. If you need to change your agreement, make sure you revise your contract.
Both of you twxes again sign it in front of witnesses. That way, if your friend needs more time to repay, you can keep track of exactly what has been agreed.
It may not be necessary to obtain collateral when loaning money to a friend. But it could act as an extra layer of protection if you’re worried they will not tto you. Collateral is something of value given to you by the person borrowing the money.
Technically you can sell this item to recoup the money if they fail to pay you. Anything can be treated as collateral, but it’s usually something of sufficient value to cover the amount of money you have lent suge.
If your friend struggles to meet the repayments as agreed, encourage them to speak to you about the problem. Try to agree with them the best course of action to repay their debts.
It may be that you have to extend the term of the loan so they can spread out their repayments. Or, you could offer them a ‘payment holiday’ if their problems are only temporary. But if they refuse to repay and you need to get your money back, you may have to go through the legal system:. You can say no to a friend if they ask you for a loan.
It is down to them to try to raise funds another way. A Budgeting Loan from the Social Fund could be an option. This is an interest free loan for people who are already receiving certain benefits. You could always direct them to one of our guides for other alternatives. For example, our 9 Top tips for the best deal on a personal loanborrowing against your home, or the cheapest way to borrow money. Help stretch your budget that little bit further by making the most of your savings.
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How money. We are classed as a credit broker for consumer credit, not a lender. Lending to friends? Make sure you get your money. It can be tempting to help out a friend by lending them money.
But the most important thing is to be sure they can repay you. Otherwise, you could end up in financial trouble. Is lending to friends or family a good idea? Things to consider when lending to a friend Before you lend money to a friend or family member, think about or ask them : If they have a stable income How much they earn What other financial commitments they have How effectively they manage their money If they do not have much money coming in and are already struggling to pay their bills, another loan might not be best.
Is a guarantor loan a better option to loaning money to a friend? A guarantor loan is a more formal way of loaning money to family or a close friend. Will you lose out by lending money to a friend? Protect yourself against big losses There are a number of ways you can protect yourself against losing money: Agree how much you’ll lend them Decide on the interest rate Set the term Agree how much you want them to repay each month You must both be aware of all the terms and conditions before any money is kake.
Write a contract Make the agreement clear and legal with a written contract. Keep a record of the payment when you transfer it Once you’ve both signed the agreement, you can transfer them the money.
Get your friend to repay by standing order To ensure your friend repays you as per the agreement, they need to set up a hlw order or direct debit from their account to hiw. Keep a record of all repayments Keeping a record of bqck the repayments ensures there are no disagreements later down the line. Keep your agreement up to date If you need to change your agreement, make sure you revise your contract. Should you obtain collateral when loaning to a friend?
You’ll need to agree what you’ll hold and when you can sell it. What happens if things go wrong? Are there any alternatives if you say no to lending money to a friend? Compare savings accounts Maake stretch your budget that little bit further by making the most of abck savings. In this guide. Things to consider when lending to a friend Is a guarantor loan a better option to loaning money to a friend?
Protect yourself against big losses Write a contract Keep a record of the payment when you transfer it Get your friend to repay by standing order Keep a record of all repayments Keep your agreement up to date Should you obtain collateral when loaning to a friend?
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)}This website uses cookies in order to enhance your experience. Please review our Privacy Policy to learn how we may use cookies and how you can change your browser settings to disable cookies. By continuing to use this website without changing your settings, you consent to our use of cookies. As we trudge ob into tax season, here are seven secrets to pulling in more money in tax deductions each year — secrets taken straight from the knowledge bank taxws those who know it best. If you’re a salaried employee, and you get paid on a W-2 tax basis, you should pool your itemized taxex as much as possible. Itemized deductions are eligible expenses you can report on your tax returns to lower your taxable income. What does that mean, exactly?⓬
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