If you are looking to reduce your spending and increase your savings on back-to-school shopping, now is a great time to take advantage of tax credits to manage your finances. There are a few ways to save, including state funded tax holidays, personal budgeting and government education credits. Here, we’ve laid out five back to school tax tips to help you make the most out of your shopping spree.
If your state offers a sales tax holiday, take full advantage of it! On these “holidays”, the sales tax is waived on certain items under $100, like clothing, footwear and school supplies. Additional tax credits may also apply to larger purchases, like computers and printers. Make sure to review the list of items the holiday applies to before you go out shopping.
Familiarize yourself with education-related tax credits that can save you money. Depending on the age of your children or their level of education, credits can help you with savings on daycare, tuition and related educational expenses. The Child and Development Care Credit, American Opportunity Credit and Lifetime Learning Credit are all education-related tax credits that can equal large savings come tax time. Keep in mind to confirm your eligibility before filing.
Student loan interest is generally tax deductible in the eyes of the IRS. If your child attends a higher learning institution, make sure to write-off the interest on any loans taken out to pay for it. While the loan itself is not tax deductible, the money credited back on accrued interest is a long term saving. Since the tax benefit is considered an above-the-line deduction and does not need to be itemized, it’s an easy write-off on your return, if you are eligible.
This sounds like an obvious tip but remember the adage “reduce, reuse, recycle”? School supplies are a perfect example of this. While kids may want a new backpack or markers at the start of the school year, it may be a better idea to have them continue using their supplies from the previous year. If everything is in good condition, there’s no reason to spend money on new supplies if there isn’t a need to.
Before purchasing larger items, such as computers or tablets, make sure to surf major eCommerce sites, like Amazon or Best Buy. Online outlets often have great deals, including free shipping, sales tax exemptions or educational discounts that could save you money on these more expensive items.
While these tips may not save you thousands of dollars, the savings are significant enough to encourage you to take part in them. Make a few changes to how you approach back-to-school shopping and you’ll reap the rewards for your efforts.
At Verdeja, De Armas & Trujillo, LLC, our team of Miami tax consultants is dedicated to providing independent and unbiased tax recommendations for businesses and business interests of all sizes. Contact us today for a tax consultation.