Are you looking for tips to maximize your tax return or how to get more money back on taxes? Handling taxes can be a stressful and sometimes confusing process, but with the right preparation, you’ll be able to maximize your savings and reduce your stress levels!
In this blog post, we’ll show you key strategies that will help ensure that you get the most out of your upcoming tax filing period.
1. Know Your Tax Deductions
Understanding tax deductions is key to reducing the amount of tax you owe. Tax deductions allow taxpayers to subtract specific expenses from their gross income, reducing their taxable income and the amount of taxes they ultimately have to pay. It is important to understand which deductions are available and where they can be claimed in order to make full use of them.
By itemizing your qualified expenses and deductions on your tax return, you are able to reduce your taxable income, allowing you to pay less in taxes. For example, common deductions include student loan interest, donations made to charity, medical or dental expenses that exceed 10% of your adjusted gross income, as well as business-related expenses such as work tools or supplies used for work.
Here are a few examples of commonly overlooked deductions:
- Reinvested dividends – Even though this isn’t technically a tax deduction, it helps reduce the overall tax liability. When you reinvest, this increases the cost basis of future sell-offs, helping you to avoid a hefty capital gain on future investments.
- State Sales Tax – Take advantage of the IRS’s calculator and find out what portion of your state taxes you can write off
- Student Loan Interest – As per new IRS guidelines, if someone else pays your student loan you can still take advantage of tax deductions as though it was done by you! As long as all applicable criteria are met, this could be a great way to reap some extra savings.
Knowing how much money can be saved through these common deductions may help you plan for future spending accordingly and will also help increase your overall savings throughout the year.
2. Maximize your IRA and HSA Contributions
When it comes to maximizing your opportunities how to increase tax refund is by maximizing IRA and HRA contributions, individual retirement arrangements (IRA), and a health savings account (HSA) each present invaluable tools.
IRAs offer tax-deferred growth on contributions that are tax-deductible, making them a powerful tool to help you save for retirement.
HSAs are also an attractive option, offering a triple tax return advantage: contributions are typically voluntary and deductible, earnings grow tax-free and distributions for qualified medical expenses are also non-taxable.
Consider how much you can both contribute to and benefit from these strategies in the long run when filing your tax return this year. If you want to know more on to get more money back on taxes it would be helpful to look for a tax CPA near me.
3. Become a Tax Expert
Figuring out how to use tax credits can be a complex process, but the rewards can be worthwhile. By taking the time to become better informed on available credits and deductions, you could find yourself with more money in your pocket come tax time.
Many people are unaware of the options, like student loan interest deductions or credits for energy-saving home renovations, that might lower their overall taxable income and maximize the amount they receive back from their tax return.
Investing a little effort into researching potential credits and deductions is a great way to get some extra cash for financial tasks like investing in stocks or setting up an emergency fund.
4. Timing is Everything
Timing can play a significant role in increasing your tax refund. If you wait to file your taxes until the last minute, you may miss out on deductions and credits that result in more money back in your pocket.
Additionally, filing early allows access to discounts and other available bonus rewards for getting your taxes submitted on time. To ensure maximum benefit when filing for a refund, consider speaking with an experienced tax professional who can provide guidance and help identify any loopholes you may be eligible for.
With proper timing and knowledgeable assistance, you could be looking at receiving a much bigger refund on your tax return than expected.
5. Know Your Tax Return Filing Status
Tax filing season can be a stressful time for many of us, but it’s an especially important time to consider our tax filing status. Depending on your particular situation, you may have the choice of filing as single, married, or head of household.
Furthermore, changes in marital status, number of dependents, or other life events can require that you rethink your tax filing status to get the best return possible.
Even minor tweaks such as changing what expenses qualify for deductions can also stress-test your current filing status and ensure you’re getting the most out of your annual taxes. Be sure to get the best information to get more money back on a tax refund.
If you follow these excellent pointers, you can ensure that you are getting the most from your tax return. Remember to keep track of all expenses throughout the year, take advantage of deductions and credits, and be prepared for any changes in your filing status.
By planning ahead and knowing what to expect, you can maximize your tax return and get the most money back possible.
For more help with maximizing your tax return or preparing your taxes in general, contact John J. Rooney CPA, PA today. We would be happy to answer any questions you have and help you prepare for tax season and other CPA tax solutions.