When tax filing season eventually comes back around, capitalizing on every tax break possible can enable you to minimize liability and potentially even get a bigger tax refund altogether. In the short term, learning how to do this is a fairly straightforward process that may simply entail following and implementing some sound financial strategies in your own life. In the long term, however, a financial advisor may be a greater necessity. With all of this information in mind, the following are four tricks to get your maximum return.
1. Consider Your Filing Status
The first trick to get your maximum tax return is to consider your filing status, which can significantly impact your tax refund quantity, whether or not you happen to be married or single. It is generally more sensible for married couples to file for returns jointly, though separate filing for returns should be considered on a situational basis. Reliable revenue officer representation can also help you defend yourself legally and financially against opportunistic revenue officers from the IRS seeking to play hardball with you.
2. Claim Your Tax Credits
The second trick to get your maximum return is to claim your tax credits, which lowers the tax amount owed based on dollar for dollar to the IRS. Some credits might even be able to be refunded, allowing you to claim them with or without liability. Among the more common such credits are those for educational expenses and others relating to income earned and family dependency. Factors such as one’s income, the existence of eligible dependents, and filing status usually determine one’s eligibility to claim the tax credits, with further guidelines for eturns related to academic purposes. Making particular energy-efficient or environmentally friendly home improvements can make one eligible for tax credits as well.
3. Don’t Forget Deductions
The third trick to get your maximum tax return is to refrain from forgetting the deductions. Tax refund credits tend to generate a larger return than deductions do. This does not mean, however, that any key qualifying write-offs should be overlooked. Rather than lowering the amount of owed money, deductions reduce the income amount that happens to be subject to taxes.
The ultimate decision regarding whether or not to avail oneself to the standard deduction or itemize must be made when filing for their taxes. The doubling of the standard deduction under former president Donald Trump’s tax plan appealed to many filers. Nonetheless, in the presence of many deductible expenses such as business and home office expenses, charitable donations, student loans and mortgage interests, and even losses, itemizing proves itself to be the better option by far. Each expense’s deductible amount does tend to vary.
Keeping the appropriate supporting documents and records such as bank statements and receipts is vital as you may need to back up a claim or two at one point or another.
4. Max Out Your IRA
The fourth and final trick to get your maximum tax return is to max out your IRA. Setting money aside in traditional IRAs allows you to gain an extra tax bonus while building a nest egg of sorts. An IRA can be funded for the prior tax year until the April deadline for filing taxes, not to mention that any contributions might be fully or partially deductible via so-called above-the-line deductions, which allow you to take deductions even when not itemizing.
Should you satisfy particular income criteria to qualify for a contributory tax credit, the so-called Retirement Saver’s Credit applies. Every single cent matters in filing taxes, particularly when one is seeking to fortify one refund. Greater awareness of the eligible tax benefits will lead to more money back into your wallet.
The bottom line is that getting more back on your refund from the government ultimately boils down to optimizing claims, credits, and deductions, as well as keeping an eye on your filing status itself. Making use of the highest quality tax filing software possible can help make this into reality. Good tax services will empower you to reach for all and any eligible credit and deduction available, all while guiding you throughout the entire process, so you don’t get stuck in it.