The end of the year is a busy time: people have the holiday season to prepare for, the new year, and of course, tax time to consider as well. Tax season helps some households recuperate some of the money spent during the holidays, and that refund can also help consumers catch up on bills, pay down debts, and increase their savings account balance.
To reap the benefits that can come along with tax time, however, you have to make sure you’re entitled to a refund first, which is something you can start looking into right now. If you begin working towards minimizing your tax liability early on, you can potentially increase the money in your pocket come tax time.
Below are the few things you can do to boost your tax refund.
The use of good timing:
Timing payments and purchases can make a difference when you file your tax return, especially during the month of December. If you pay January’s, mortgage payment during December, for instance, that could get you added interest for your mortgage interest deduction on your return. And, if you schedule your medical procedure in December instead of waiting until January, that could just be the extra amount you need for your medical expenses deduction.
If you were planning on incurring these expenses anyway, consider taking on some of these expenses during the 2018 tax year if they will benefit you at tax time.
Participate in IRA contributions
Not only are you investing in your future when you open up an IRA, contributing to an IRA can increase your tax refund because the money you place into it may end up reducing your taxable income. That is, the more you contribute, the less taxable income you may have to claim.
Get different documentation and compare the various filing scenarios
When filing time comes around, most tax payers just want to get it over with and get their refunds. It takes time to gather every receipts, figures and all documentations you need to file your return. So, getting these items together before time can help you prevent missing any pieces of the documentation that may result to a larger refund.
You can as well you the information you have available right now, like your tax return from last year and your last pay sub in order to compare different filing scenarios.
Thoroughly analyse last year’s return and look for missed opportunities
Last year’s tax return can serve as an excellent resource when preparing for tax filing this year. Not only can you gather information, like your adjusted gross income.
Although there are software programs, tax professional, and literature that helps taxpayer’s find deductions and credits, people overlook tax benefits all the time. Does anything stand out last year’s tax return? If you noticed any missed opportunities, make a note of them so that you can be sure to take advantage.
Look out for free or inexpensive way to file
Filing taxes the old fashioned way meant visiting a professional or reading and filing out that booklet line by line. Paper filing was tedious, and it required a certain degree of understanding of the tax code. These days, taxpayers have several options when it comes to filing, ranging from paid or free software.…