A transportation or flexible spending account is an employer-sponsored plan that allows the taxpayer to put aside a certain amount of money during the tax year to augment the costs incurred as a direct result of operating a motor vehicle in the performance of his or her professional duties. Thus, a TSA can lower your taxes in these ways:
1. When you spend money to offset the costs of operating your own car (for commercial purposes only), the federal government awards you a tax credit called the transportation tax credit. All you have to do in order to claim this credit is file the transportation tax credit form during the tax year you initiate your return. But make sure you keep all those tax receipts and other innuendos pertaining to the money you have spent.
2. Purchasing a new home is another way you can lower your taxes. Furthermore, a new home is a tremendous tax shelter toward reducing the amount of your overall tax liability. So, in order to claim a credit for such a purpose, you must file the home tax credit form along with your return.
3. Did you know that the government awards those couples who have divorced their spouse or significant other? This is called the spousal support or alimony credit. And in order to claim the credit, you must file the spousal support/alimony tax credit form. Also, if you and your partner cannot get along, then you fall under those same governmental regulations as they pertain to the spousal support/alimony tax credit (palimony). All you have to do in order to claim the credit is file those corresponding forms along with your tax return.
4. Each year the government give you credit for the amount of income you earn. This is called the earned income tax credit or EIC. In order to claim the credit, your income must fall within the acceptable guidelines to be approved of such credit. Also, you must file the corresponding forms along with your tax return.
5. Also, for any children that you have, you can claim the dependent child tax credit. So, you must file the dependent child tax credit form along with your tax return.
6. Along with the aforementioned tax credits, you should itemize your deductions? To itemize your deductions you must file the itemized deduction form called Schedule A along with your tax return.
So, when you file your taxes for the upcoming tax year, you will know that if you have complied with the aforementioned tax credits, then you will pay a reduced tax liability or lower your taxes for the upcoming tax year.