Tax season is fast approaching, and it is a time that is an enigma to some. Some people wonder: am I really getting the most out of my tax return? It may seem that life circumstances constantly change—you switch jobs, people become dependent or independent from your care, and your changing expenses can make you feel like you have to completely rethink your taxes. You may forget that a big chunk of your pay is getting taken out every month. If you need examples of boosting your refund, tax resolution stories from Community Tax are an excellent example. Luckily, there are a few reliable ways that can help you get the most out of your tax return this season.
- Increase Your Deductions. Before tax season even comes, check in with the human resources department of your job to double check how much in taxes is already being taken out. If possible, be sure that the maximum in taxes is being taken out of your check. This prevents a lot of monotonous bookkeeping from month-to-month and ensures that you won’t owe at the end of the year. Also, if you acquire more dependents, make sure you list them as soon as possible. Any changes that would influence your filing status should be applied as soon as possible.
- Watch Your Timing. Who doesn’t want their money as soon as possible? Filing as soon as you receive your W-2 puts money in your wallet right away. Receive your refund to pay down debt right away, or to put it away for the trip you have planned for the year.
- Maximize Your Deductions Early. There are advantages to paying off certain necessities before December 31. One strategy is to pay your property taxes by New Year’s Eve. If you pay before the end of the fourth quarter, it will make all the difference between itemizing and paying the standard deduction, which will give you a bigger refund. In addition, paying January’s mortgage early—before December 31—will give you the added interest for your mortgage interest deduction. Finally, schedule any doctor’s appointments or health exams in the last quarter to maximize the chance of deduction.
- Deduct Your Donations. There are chances you have donated in the last year but you didn’t know it. Did you drop off clothes or furniture at Salvation Army recently? If you saved the receipt, you can use that as a deduction. You can deduct any personal property, stocks, securities, money, and expenses that occurred while volunteering. Charitable contributions include any tax-exempt organization, including colleges, nonprofit hospitals, community groups, and religious organizations. The best way to maximize your return in this area is to keep track of all charitable acts and donations that are documented in the form of receipts or other documents.
- Remember IRA Contributions. If you contribute to an IRA and are not covered by a retirement plan at your job, then you can deduct those contributions. As of 2017, the contribution limit is $5500, or $6500 if you’re over fifty.
- Cash in on Your Small Business. Running a business out of your home can benefit your tax return. You are allowed to deduct a portion of your expenses used only for your business. This includes a percentage of your mortgage or rental payment, and other expenses like internet service and telephone service that you use in your own home (as long as you use your home as your office). Home office deductions have been simplified so that you can multiply a basic rate by your home office square footage.
- Use Your Family. There are many deductions you can make if you have familial obligations. Don’t just rely solely on your dependent deductions—also consider whether you take care of an elderly relative or if your child goes to daycare. Most of these expenses related to your family are deductible.
- Think of your Credit. Increase your refund by looking at your credit. If you meet all procedures, you may be eligible for EITC. You can do this even if you are not married and do not have children. On the other hand, if you have children in college, you can get up to $1,000 refunded through the American Opportunity Tax Credit. Note that this only applies to the first four years of undergraduate higher education. If, for yourself, you are in graduate school, you can look into the Lifetime Learning credit.
- Keep Up with Tax Laws. Tax laws change frequently from city, to state, and all the way up to federal. Some credits will be available one year and may disappear the next. Boost your refund by keeping up with tax laws.