Who doesn’t want to maximize the tax refund they get when they file their annual refund? There are different ways you can achieve this, depending on the spending you did during the year. In this article, we’ll focus on the different types of deductions you can use and various other tactics that boost your refund.
Now, let’s get into what you can do this upcoming tax year to get the most out of your tax refund.
Make Sure to File Early
We all know the looming deadline for tax returns is April 15th, but that shouldn’t be your goal. Your goal should be to send in your tax return early on – like at the beginning of the year before spring hits. As soon as you receive your W-2 (or last paycheck for the year), you can file your return.
If you were self-employed, then you can file form 1099-Misc. Whatever form you’re using, you can file yourself online using a provider. Or you can go to a CPA in your area. The quicker you e-file your tax return, the quicker you’ll get return.
This is especially true if you are receiving a direct deposit.
Itemize All the Deductions You Can
Hopefully, you’ve kept track of all the expenses you made during the year. You are allowed to reduce your taxable income by iteming these expenses on your tax return. If you’re single, you can lower your taxes by up to $6,300. And if you’re married filing jointly, you can lower your taxes by up to $12,600.
So keep all the receipts for the related purchases, so you can get the numbers right. This way, if you get audited, you won’t end up in hot water with the IRS.
Some of the items you can deduct include casualty losses, charitable contributions, unreimbursed business expenses, unreimbursed medical expenses, state and local sales tax deductions, mortgage interest and job search expenses.
Make Contributions to Your Retirement Account
Each year, you have until the filing deadline to contribute money to your IRA. This can offer a tax reduction by up to $5,500 or $6,500 if you’re 50 or older. Then you may also qualify for the Saver’s Credit, which is like a double dip that’s legal. This can give you an additional $1,000 if you’re single or $2,000 if you’re married filing jointly.
Deduct Expenses for Supporting a Friend or Relative
Children aren’t the only dependents you can get expenses refunded for. If you have a friend, significant other or relative you’ve been financially supporting, you can use the dependent exemption. You are able to deduct $4,050 from your income.
If it is a non-relative, they had to have lived with you for the past year. And relatives aren’t required to live with you. You have to provide more than half of their support and they can’t can’t have more than $4,050 in taxable income.
These are just some of the ways you can boost your tax refund. If you want to treat your children to some new gadgets, you can use coupons from Groupon to shop at Toys R Us and other popular stores