Tactics to maximize tax refund involves planning ahead. Your filing status is one of the major factors that could affect your refund.
Since its tax season is here and your forms have arrived in the mail, gather them together and check if these three situations apply to your tax status don’t miss any deductions or credits that you can qualify for.
Tax brackets were updated with the Tax Cuts and Jobs Act of 2017 TCJA and maybe your filing status changed. These main reasons can increase your tax refund or lower the taxes that you may owe.
If you know about it this year, you’ll be able to plan better for next year.
Filing status can Maximize Tax Refund
Your filing status is the biggest influence that can increase tax refund and it also determines your tax bracket for future tax filings.
- Check your standard deductions.
- Ask your tax professional for credits or deductions you qualify for.
- If you received a bump in income, you might pay more taxes or may affect your refund.
- If you took some disability income can affect your tax credit.
Filing status changes are: single to married, married and you become the head of household, the number of dependents that you might claim. These important changes affect the majority of your tax situation.
Earned Income Tax Credit
This credit is focused to benefit working individuals and families. Certain qualifications need to be met to avail of the credit.
- Valid Social Security Number.
- U.S. citizen, married to an American, Green Cardholder for a full year.
- Your income is from self-employment, you’re an employee or from a working farm.
- You can’t be claimed by someone as a dependent.
- You have a qualifying son or daughter between the age of 25-65, living with you at least half a year.
Even if you don’t owe any taxes, you need to file your returns to claim this credit. It can definitely add to your tax refund.
Child and Dependent Care Tax Credit
This is different from the child tax credit as suppose to Dependent Care credit. This credit is mainly related to the expenses for the care of the dependent individual.
- Under the age of 13
- Dependent on the spouse
- Must have earned income
- Must pay child care or dependent care for you to go to work or look for work.
- The provider must have a Provider identification number on the tax return.
Claiming the Credit:
- Are you Married? You need to file jointly.
- The caregiver must not be your spouse or parent of the child, nor your child under 19 and you claim as your dependent.
- A valid Social Security Number is required for each qualifying dependent or child.
- Name of the caregiver, address and tax identification number (TIN) or Social Security Number
Other ways to maximize tax refund
There are a number of other tax credits and deductions that you can plan and take advantage of before the end of the year. For instance:
- Mortgage interest deduction– Make an extra to your mortgage before the new year; this way you can deduct mortgage interest.
- Medical Expense deduction- Its best to schedule the majority of your health-related supplies and treatments in the later months of the year.
- Expenses for being self-employed- It pays to be methodical if you are self-employed. Record all gas receipts, mileage for vehicles used for business, get the square footage of the room you use in your house so you can claim it as an expense, etc.
- Charitable Deductions- Your charitable deductions could cut down your taxable income. Make sure that it’s a certified charity institution to claim this credit and the contribution should be before the end of the year.
- Energy savings tax credit- If you upgrade your water heater, replace your drafty windows to a more efficient one and even certain roofing materials. These upgrades also increase your home value.
If you have any questions about your tax returns, business returns or you need bookkeeping services, let us know.
Remember, don’t hesitate to claim a credit or deduction. Just make sure to keep receipts in case the IRS would inquire about it.
A seasoned tax professional can help you plan and claim the correct credit and deduction to maximize tax refunds or lower your tax liabilities for future filings.
