Tips For Getting a Bigger Tax RefundMarch 20th, 2014
The deadline for filing taxes is right around the corner. Many people will rush to file their taxes and miss out on the opportunity to get a larger income tax refund. Here are some tips for maximizing your tax refund this year:
Deductions, when used correctly, can maximize your tax refund. The standard deduction is commonly taken simply because it is simple. There are no calculations needed because the IRS has defined a “standard” dollar amount that you are entitled to. Itemized deductions, however, should not be passed over if they offer the best tax advantage. Itemized deductions should be recorded throughout the year; records for itemized deductions should be kept for seven years. Valuable itemized deductions include medical and dental expenses that exceed 10 percent of your adjusted gross income, charitable donations, mortgage interest, property taxes and sales taxes.
Often overlooked or confused with deductions, tax credits can reduce your tax liability and increase your tax refund. As opposed to deductions, which are taken from your income, tax credits are applied directly to your tax liability. Credits should always be utilized to give the best tax advantage. A few credits you could be eligible for include the Earned Income Credit, the Lifetime Learning Credit, the American Opportunity Tax Credit and the Child and Dependent Care Credit.
Did you know that your IRA contributions can be used to get a bigger tax refund? As long as you are within the deadline and maximum contribution limit, the money you add to your IRA can help reduce your taxable income.
Perhaps some of the very best tax advantages come through business ownership. If you have a home business or own rental property, you can write off a plethora of business expenses. Management, advertising and maintenance fees can all be deducted “above the line”, meaning that you can still use the standard deduction with your business expense deductions. Other business expenses include equipment and, in some cases, a portion of you home’s utilities and rent/mortgage payments. This results in a lower tax liability and bigger tax refund.
Did you know that filing your taxes on time can increase your tax return? Timely filing helps ensure a bigger tax refund by avoiding the rush and making mistakes, as well as avoiding penalties.
Using the tips above will help get a bigger refund. However, each year, tax laws change. Keeping up with these changes will ensure continued accuracy for a larger tax refunds each year. If you have any questions regarding this year’s tax advantages, give the friendly professionals at Tucson CPA firm Flowers Rieger a call.