Are you middle class and looking to save some money when filing your taxes?
Read More: 5 Tax Loopholes the Ultra-Wealthy Use That Most Americans Don’t Know About
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GOBankingRates asked ChatGPT which IRS rules can help middle-class workers keep more of their money. Make sure to consult with a professional financial advisor before using any of the following results.
Also see one simple money move that can lower your tax bill before filing.
Standard Deduction
According to ChatGPT, the standard deduction reduces the amount of income that’s subject to tax, and it’s often large enough that many middle-class workers don’t need to itemize.
“Choosing it simplifies filing and can significantly lower taxable income,” ChatGPT noted.
Check Out: 5 Ways You Can Reduce Your Tax Bill Like a Millionaire, According to Robert Kiyosaki
Child Tax Credit
If you have qualifying children, ChatGPT highlighted that the Child Tax Credit directly reduces your tax bill dollar for dollar.
“Part of it may be refundable, meaning you could get money back even if you owe little or no tax,” it explained.
Earned Income Tax Credit (EITC)
“The EITC is designed for low- to moderate-income workers and can be very valuable for middle-class families with children,” ChatGPT said.
On top of that, the chatbot stated the EITC is refundable, so it can increase your refund even beyond what you paid in taxes.
Retirement Savings Tax Benefits
Contributions to traditional 401(k)s and IRAs are often tax-deductible, lowering your taxable income now, according to ChatGPT.
“Some workers also qualify for the Saver’s Credit, which further reduces taxes for contributing to retirement accounts,” ChatGPT said.
Health Savings Accounts (HSAs)
“If you have a qualifying high-deductible health plan, HSA contributions are tax-deductible and grow tax-free,” ChatGPT pointed out.
In addition, ChatGPT explained that withdrawals used for qualified medical expenses are also tax-free, creating a rare triple tax advantage.
Education Tax Credits
Credits like the American Opportunity Tax Credit and Lifetime Learning Credit help offset college and job-training costs, per ChatGPT’s findings.
ChatGPT also shared that these credits can directly reduce the tax you owe and, in some cases, increase your refund.
Capital Gains and Qualified Dividend Rates
“Long-term capital gains and qualified dividends are taxed at lower rates than regular wages for many middle-class taxpayers,” ChatGPT described.
On top of that, ChatGPT explained that it encourages saving and investing by letting you keep more of your investment returns.
Flexible Spending Accounts (FSAs)
“FSAs let you pay for certain medical or dependent-care expenses with pre-tax dollars,” ChatGPT shared. “By reducing your taxable income, they effectively lower both your income and payroll taxes.”
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This article originally appeared on GOBankingRates.com: I Asked ChatGPT Which IRS Rules Can Help Middle-Class Workers Keep More of Their Money
