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In today’s economy, saving money is key. It’s important that you know how make your taxes work for you, not against you. Let’s discuss four great tips for getting the most back on your taxes.
1) Filing Status
Picking the right filing status can affect your refund in several ways. It is crucial that you choose the right option to ensure that you don’t miss out on any money.
It’s been shown that 96% of married couples choose to file jointly. But did you know that this isn’t always the best route to take?
While it’s true that filing separate can have negative consequences, like missing out on certain deductions, your accountant may feel it’s best to file this way to avoid other payouts.
By linking up with the experts in all tax-related matters, you will be on the right track to boosting your refund like never before.
2) Tax Deductions
There are many deductions out there that you may not know exist. Several of them get overlooked fairly often. What you qualify for can significantly impact your tax refund. Things like state sales tax, reinvested dividends, out-of-pocket charitable contributions, student loan interest, child and dependent care, earned income tax credit, jury duty fees, medical miles, and charity miles.
It’s vital that you keep good records for your deductions. This is especially true if you don’t get receipts for charitable contributions or medical miles. Make sure that you keep track of dates, miles traveled, and any medical or charitable work related to travel. You will also want to keep a log of any out-of-pocket expenses that went toward charity work.
3) Maximize your IRA and HSA contributions
Since you have until April 15th for your filing, open a traditional IRA for last year’s taxes. You can still make a contribution that will go toward the previous year’s taxes. You’ll have the option of claiming a credit on your return by filing early and using the refund toward opening an account.
Timing is key to improving your chances of a great tax return. Look at all the contributions you made before year’s end. This will help to minimize your taxable income.
Let’s say you made a payment in December that is usually due January. The additional interest will go toward that due deduction.
By taking care of health-related needs during the last quarter. This will improve any medical expense deductions.
Any contributions toward charities should be done in this time frame, as well. Just make doubly sure that you keep track of each contribution.
As a self-employed tax-payer, look at any deductions that can be taken from purchases you have made. Supplies and things of that nature are a great way to give your refund a boost.
Follow these tips to the letter and you should see a noticeable increase in your tax refund. You can do these every year to ensure that you stay ahead. If you aren’t already, it is important that you practice excellent record-keeping. This will play a big role in your refund by the end of the year.