Tax season is upon us, and it can feel overwhelming to determine the best way to manage your taxes and maximize your refund. However, by understanding the basics of filing taxes, you can reduce your obligations and get the most out of your refund. Here are some tips for maximizing your tax return.
Understand Your Filing Status
Your filing status affects how much you must pay in taxes and what deductions you’re eligible for. Understanding which filing status is right is crucial to maximizing your refund amount. Common filing statuses include:
single or head-of-household;
married filing jointly or separately; and
qualifying widow(er) with dependent child.
Be sure to consult a certified public accountant (CPA) or another tax specialist if you’re unsure which status to file.
Consider Itemizing Deductions
Itemizing deductions on your taxes can be beneficial, depending on how much money you expect to receive back from the IRS. If you had significant out-of-pocket medical expenses, made charitable contributions, or paid mortgage interest during the past year, itemizing may be a smart move for reducing any taxes owed and increasing refunds.
Maximize Retirement Contributions
Maximizing retirement contributions is another way to lower taxable income while setting yourself up for greater financial success. Employers often match employee contributions to certain amounts each year—think carefully before declining any employer match. Additionally, contributing pre-tax dollars to an IRA or 401(k) plan has numerous long-term benefits regarding retirement planning and estate preservation.
Take Advantage Of Tax Credits Where Applicable
The IRS offers several credits designed to help taxpayers save money on their taxable income and increase their refunds at tax time. These credits include earned income credit (EIC); student loan interest deduction; child care credit; adoption credit; lifetime learning credit; energy credits; among many others. Be sure that all applicable credits are applied when completing a return to maximize savings potential from Uncle Sam.
By understanding these basic tips along with consulting an experienced professional, taxpayers should be able to make smarter decisions that reduce their total obligations payable come April 18th while putting more money back into their pockets via higher refunds.
Tax season can be overwhelming if you have significant tax debt. Get in touch with our team at Law Offices of Darrin T. Mish, P.A. to learn how we can help you! (813) 295-7648