It should come as no surprise that everyone always looks for different ways to get every tax dollar back for their tax refund. Fortunately, there are a number of moves that you can make before the tax due date in order to maximize the amount you get back as your refund. Just by spending a few extra minutes to dig deeper can help save time when you prepare your taxes, resulting in a bigger savings overall. This article will approach five ways to maximize your tax return for 2014: try them, because last year Americans left over a billion dollars unclaimed!
1. Get organized early. The best thing you can do is get organized today so you’re prepared when it’s time to file. Pull up the necessary tax forms, such as your W2s, your 1099-INTs or 1099-MISC. Ensure you have all of your receipts for expenses related to work, as well as documents like tuition statements, mortgage interest or property tax, all of which will help when it’s time to prepare your return so you do not miss a deduction that raises your refund. Also, consider hiring an accountant if you do not yet have one. Having a bad accountant will cause you a remarkable amount of trouble, so do your research- a competent accountant will more than pay for itself.
2. Remember your charity. When you donate to a qualified charity to help someone in need, you could increase the refund you receive. Just remember that you will need the receipts and documentation for every donation that you make throughout the tax year. Itemizing deductions on your taxes allows for cash contributions as well. Do not forget actual items you have donated either, such as bikes, toys, clothing or furniture. You might even be able to deduct the miles used to volunteer at a charity.
3. Avoid paying penalties. If you might owe taxes, chances are you are waiting until the last possible moment to submit your tax return. If you rush through the process, it is more likely that you will make an error that lessens your deductions. Start preparing documents now and avoid a late payment fee.
4. Look at a retirement plan. By investing in an individual retirement account or a 401(k), you can increase your refund while creating a nice nest egg for retirement. An IRA or a Roth 401(k) allows your account to build while letting you withdraw funds tax-free upon retirement. You get an immediate tax break and can defer them until you withdraw the funds.
5. Find that extra credit. Hidden tax breaks are everywhere, whether they are related to education, earning income, dependents or any number of places. Regardless, there is no reason why you should miss out on a tax credit that might afford you a larger refund for your taxes. These might end up being more valuable in the long run than tax deductions as they reduce your liability for tax evenly. It is even possible to qualify for the earned income tax credit, as well as either the lifetime learning credit or the American opportunity tax credit.
Above all, it is important to save your refund for a rainy day. Remember that this is not money being gifted to you from the IRS; it is some of the money you have earned throughout the year via labor, so remember to use it wisely. Consider depositing the refund right into your savings account or looking into getting some paper bonds. In the United States, one in four people are underbanked or unbanked, so savings bonds make a good option for a refund.