It’s all about the timing
Improve your chances of a higher refund by keeping an eye on the calendar. If you're self-employed, you can pay your fourth-quarter state estimated taxes in December, rather than in January when they're normally due, to increase your itemizing potential. If you can, pay January's mortgage payment before December 31st and get the added interest for your mortgage interest deduction.
Schedule health-related treatments and exams in the last quarter of the year to boost your medical expense deduction potential. Paying property taxes by New Year's Eve could make the difference between itemizing and taking the standard deduction, and thus, a bigger refund.
Rethink your filing status.
Rethinking your filing status can help you increase your refund's size. Most people know that there are tax reductions from claiming your children as dependents. You need to have one or more children who lived with you for more than six months, and paid more than 50 percent of the cost of keeping a home. But did you know that taxpayers who care for a parent may also qualify for a head-of-household status if they pay more than half of the cost of maintaining that parent’s residence for the whole year?
If you are married, filing a joint return is not always beneficial. The married-filing-separately status may require more effort, but the time you invest can offer tax savings under the right circumstances. Calculate your taxes both ways to identify which is your best option.
The IRS uses a percentage of Adjusted Gross Income (AGI) to determine whether some deductions can be used. Filing separately gives each spouse a lower AGI. If one spouse spends more on travel or medical expenses, computing taxes individually allows that spouse to reach the needed AGI percentage based on his or her own income. However, choosing to file separate returns can have drawbacks, such as losing credits available to joint filers.
Rack up those tax deductions
Keeping travel and charitable donation records could help you reach the needed minimum percentage of AGI for miscellaneous deductions. Record the dollars spent on charity work. Claiming the market value of any clothing or household items you donate can help your refund cause. Miles can add up from volunteer work, job-hunting and doctor appointments, write off the cost of using your car through the standard mileage rate. You can also deduct moving and storage expenses if you are moving 50 miles or more away for your new job. Learn more about deductions on the IRS webpage.
If you still find tax season too daunting leave it to the experts at Tax Leaders. We know the tricks of the trade that will get you the highest refund possible.