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6 Strategies for Getting a Fatter Tax Refund This Year

Tax season is upon us, and the 1099 and W2 forms have been sent out. When filing out tax forms, whatق€™s on many Americans minds is whether or not they are overpaying their tax bill and leaving money on the table. It is imperative that you do everything you can to secure as big of a refund as you can this tax year to avoid missing out on money in your pocket. Lucky for you, weق€™ve put together six strategies for getting a fatter tax refund this year.

1. آ Be Savvy with Your Tax Elections

Tax laws have a number of elections that let you pick the best way to handle a particular tax item. For instance, if you were the victim of a casualty loss in a disaster declared by FEMA in 2015, you may deduct the loss on an amended 2014 return. However, if youق€™d get a larger write-off if you report it in 2015 because you have a lower adjusted gross income, then doing so will be the smarter move. Another example is if you sold your property using installments. You may choose to report the full amount of payments on your 2015 tax return instead of spreading them throughout the years that the payments will be received, which makes sense if you have losses that offset the gains.

2. آ Leverage Your IRA Contributions

You have until mid-April to open an IRA account for the last tax year. This allows you to have the flexibility to claim credits on your tax return by filing early and utilizing the refund to open the IRA account. Making contributions to a Traditional IRA account will lower your taxable income. You can max your contribution limit to take full advantage of this, and if you are 50 or older, you can contribute even more as part of a catch-up provision. If you choose to contribute to a Roth IRA, then you can claim retirement savings credit that will also reduce your taxable income.

3. آ Get Help from the Pros

With all the tax prep software on the market these days, it has become easier than ever to file your own taxes. However, forking over between $100 and $500 to have a professional file your taxes can pay off if they can find ways to get you a refund of hundreds if not thousands of dollars that you might miss. Tax professionals are experts about which filing status, credits, and tax deductions will work to your advantage.

4. آ Deduct Charity Costs

If you volunteer for a nonprofit organization and itemize personal deduction, then you can write off any expenses you incur while volunteering. For instance, if you deliver food to the elderly then you can deduct your gas at 14 cents per mile, as long as you keep records of your driving. Additionally, if you purchase anything for the charity, then you can deduct those expenses. Bear in mind that receipts are not sufficient records if you spend more than $250 on a donation, as youق€™ll need a written note from the charity acknowledging the cost.

5. آ Be Smart About the Status of Your Filing

The majority of people will not think much of looking at their filing status, such as married-filing-jointly, individual, etc. However, what you file under can have a significant impact on how much of a refund you receive, and so it is recommended that you make a carefully thought-out decision. If married, you should calculate the amount of taxes youق€™d have to pay both as married-filing-separately and as a joint return to see which one will give you a bigger refund. Although this is time-consuming, especially if you are filing your taxes yourself, it is well worth the effort.

6. آ Donق€™t Lose Out On Credits

Although deductions lower your taxable income, credits actually have a substantially larger impact. This is because every dollar used as a tax credit is a dollar you get in your refund. It is recommended that you check to see if you qualify for an Earned Income Tax Credit. You may also qualify for childcare credits if you need to pay a service or an individual to take care of your kids while looking for work or working. You may also qualify for a Lifetime Learning Credit for having attended a post-secondary institution and if you are paying for college-related fees or tuition expenses for a dependent or yourself then make sure to look into the American Opportunity Tax Credit.