How to maximize my deductions and credits, as well as minimizing my taxable income?

[lan0943]

Hi,

I am a 34 year old independent working in the civil engineering industry. Are there any general tips for maximizing my deductions and credits, as well as minimizing my taxable income?

Additionally, I filed my federal tax of FY 2021 in April 2022 but still haven't filed my state tax yet to North Carolina (I printed out the finalized form using another tax provider but never mailed it out. Am I still eligible to get the tax refund? If yes, are there any penalties in getting less than the maximin amount? What is the best approach/procedure in doing this in a timely fashion (aka can I file using turbotax this year for my 2021 state and 2023 state at the same time)? Thank you!

Regards,

[Vanessa A]

There are not a lot of credits or deductions available for single individuals.  But there are some things you can do include:

1. Maximize your retirement savings. You can contribute up to $23,000 to a 401K or $7,000 to an IRA. This will defer your taxes on the income until you withdrawal the funds. Remember, if you make an early withdrawal, there is a 10% penalty. 
2. Contribute to a FSA through your employer.
3. Do a home energy project.  Doing something like replacing windows, doors or insulation can reduce your tax liability by up to $1,200.  If you invest in solar or wind energy home improvement, the credit is 30% of the cost of the project with no cap.  It can reduce all of your tax liability for the year and can be carried forward until used all up. 
4. Buy a new or used hybrid or electric vehicle.  This credit can be worth up to $7,500 for new vehicles and $4,000 for used.  For a single individual there is an income limit of $150,000 for a new EV and $75,000 for an used EV. 

As for your state tax refund, yes, you can still send it in to claim the refund. You would have to print and mail your 2021 return as only 2023 is able to be e-filed at this time. 

[lan0943]

Thank you so much Vanessa!

In terms of print the 2021 return out, can I use turbotax to prepare this month for my 2021 return again? I am not sure if I can still find my old printed out version of my 2021 return. If yes, I would only need my W-2 for that year correct? Any supplemental documents on top of that? I hope there is no penalty for late filing with North Carolina?

And I have turbotax covered with my metlife plan. Can I use it to generate my 2021 return for free plus my 2023 federal + state? I really appreciate your help!

[Vanessa A]

No.  If you do not have the copy from 2021, you cannot use this years program to file 2021.  You can only file 2023 with this years program.  If you used TurboTax in 2021 online, you would be able to go back to your 2021 return and reprint the state return.  And yes, you would need to include your W-2 from 2021 as well as any other documents you use to prepare your return such as a 1099 or 1098.