Maximum Tax Refund Strategies

You work hard for your money, so why would you give it all to Uncle Sam? If you dread tax season every year because you end up owing taxes, there might be something wrong with how you figure your deductions and credits. If you love tax season because you get money back annually, you might be able to increase that refund amount. Here are some strategies to ensure you get the most out of this annual and often disputed responsibility.

Itemize Where You Can

The biggest mistake people make each year is they get lazy. Rather than itemize their tax deductions, they simply take the standard deduction because they think it’s enough. Here’s the thing, though. A deduction is just that, a deduction from the money you owe the government, and the more you can subtract, the lower your tax bill. As U.S. News and World Report says, the standard deduction is set by the IRS, and it isn’t going to give you as much leeway as you might think. Take the time to figure out all of your deductions to see if that is greater than the blanket one. You can claim casualty losses, charitable donations, job search expenses, local and state sales taxes, and more.

Claim All Dependents

You know you can claim your under-aged children as dependents on your income tax return, but did you know that you might be able to claim other relatives and even friends, as well? If you have anyone living under your roof that relies on you for his or her living, you might be able to add him or her as a dependent on your tax return. There are conditions to qualify for the dependent exemption. For example, if your college buddy has been living with you for over a year and cannot support himself, provided he doesn’t earn taxable income exceeding the IRS’ specified limit he’s a dependent. Relatives do not have to live with you to qualify as long as you are their sole provider.

Look Above the Line

You can also take above-the-line deductions, which reduce your taxable income. This is somewhat akin to itemizing. Save your receipts and claim any applicable deduction. If you’ve watched the news lately, you’ve seen teachers striking throughout the nation because they don’t have enough money to provide their students with necessary school supplies among other reasons. If you’ve bought school supplies for your child, you can claim them as a tax deduction. You can also claim your continuing education expenses for job advancement. Alimony, self-employment tax, student loan, and even your Dallas car insurance policy for any medical or business driving that you do might be deductible.

One of the two things Benjamin Franklin said was certain was taxes. Forget about the other thing. When it comes to your taxes, Uncle Sam isn’t going to offer you a helping hand. It is your responsibility to get the most out of your returns to maximize your refunds. Pay your taxes strategically throughout the year, and make certain that you claim each and every deduction and credit to which you are entitled. If you find taxes confusing, hire a CPA to prepare them. His or her fees are deductible, too.

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