For some, it’s the most wonderful time of the year, but for others it’s that dreaded time again. While some will see green others will be crying red. However, have no fear, we have some information that may help you get through this painful process a little bit easier.
First, rejoice, we are all the same age. Beginning in 2020, the age limit was removed for traditional and Roth IRA contributions. For 2026, the max IRA contribution limit is $7,500 for under 50 and $8,600 for 50 or older. This means people still have a chance to put retirement money away for 2026. Just remember, you or your spouse must have earned income in 2026 to contribute, and deductibility depends on multiple factors. However, after rejuvenating ourselves with an IRA contribution it’s time to check for some of those coveted tax credits.
Tax credits reduce the tax you owe dollar for dollar. While some credits are non-refundable—basically one’s income taxes owed can’t go below 0—some credits are refundable. A refundable tax credit is a credit you can get as a refund even if you don’t owe any tax according to the IRS. Therefore, you might get more back than you think, but you won’t know unless you file. Now that you have decided to file the most important part is deductions.
Deductions reduce how much of your income is subject to tax. Most people will take the standard deduction which increases for inflation each year and makes filing a sinch. However, some of us will be lucky enough to itemize. Itemized deductions are specific types of expenses the taxpayer incurred that may reduce taxable income. These are also referred to as “below-the-line” deductions. However, there are also “above the line” deductions. Eligible taxpayers can claim these regardless of whether they itemize or take the standard deduction, so everybody wins.
Staying informed and being proactive is critical to navigate tax season confidently. For the most strategic and personalized advice, contact your tax advisor.