The number one money saving tip:
Re-Examine Your Filing Status
Regardless if you file as single, jointly, head of household, married but filing separately – Your status can be a major money saving tip in the size of your tax return.
Whether you are married or single will most likely have an impact on how you file. Many married couples will file joint returns which usually result in certain tax breaks, a lower liability, and often a larger refund. This is not always the case, however. Depending on your expenses, job types, and financial risks, filing separately could be a better option. If you’re in doubt, calculate both scenarios to determine your decision. Your status may have changed during the last tax year due to a life changing event such as divorce or death. This may qualify you for a larger refund.
Filing as head of household could benefit a single parent or a single person who is caring for a parent – if they pay for that parent’s residence or care at a retirement or nursing home.
Increase Your IRA Contributions
One of the most financially positive money saving tax tips to increase your refund, is to make a contribution to your IRA and designate that it be put toward the previous year. This option performs double duty since you’re saving for retirement while also lowering your total taxable income. Keep in mind there’s a deadline for doing this (04/15/2014 this year for the 2013 tax year), and a maximum amount (25% of gross income) that can be applied for lowering taxable income. When it comes to IRA contributions for maximizing your tax refund, it is best to consult a tax advisor to be sure you are contributing the right amount and meeting the required deadline.
Brush Up On Current Tax Laws
When tax laws result in new deductions and often create larger refunds and happier taxpayers. Sometimes you have to put in a bit of effort to find out 1) if any laws have changed, and 2) if those changes affect your financial situation and thus, your refund.
Examples include new laws which impact consumers who are environmentally-friendly — they own hybrid vehicles or have revamped their homes with energy-efficient features and appliances. There are, of course, some restrictions and extra forms to complete, but if you’re up for doing your homework, you can reap the rewards in your final refund.
If you’re using a tax advisor, he or she will likely be aware of any changes and make sure to incorporate them when preparing your tax return. If you’re using tax software like TurboTax or TaxACT, they’re updated annually with anything affected by law changes like new deductions and/or credits and will also take into account your individual finances.
If you need answers to your tax questions, don’t be afraid to ask. For valuable information on everything tax-related from general filing to credits & deductions to tax law changes, use the IRS as a resource. Their Interactive Tax Assistant can be found at www.irs.gov and will provide the tax answers you need.
Don’t Forget Any Deductions
Remember that all your deductions are money saving tips. Each donation is worth something and even the small ones add up. Therefore, be sure to include the big (and little) ticket items that apply to you.
Credits and deductions available on federal returns due April 15, 2014 include:
- Child and Dependent Care Credit
- Child Tax Credit
- Tuition and fees deduction
- American Opportunity Credit
- Educator expenses deduction
- Deduction for mortgage insurance premiums
- Alternative Minimum Tax.
- Adoption credit
- State and local sales tax deduction
Last but not least, be sure to include charitable donations. Some common donation expenses that can be deducted include: mileage, cash, property, and tithes. While these donations are a money saving tips and can help lower your tax bill, they also come along with some restrictions so be sure to check with the IRS for tips on charitable deductions. There is also a mobile app – It’s Deductible – for tracking your donations.
Get Some Free Help
You have a variety of money saving tips for filing your return. You can go it alone or enlist the services of a tax preparer. For those who are eligible, there are free volunteer sites that exist to offer face-to-face tax help. Don’t forget – your credit union may offer free tax prep resources to all members – you can them a call or check their website for further info.
There are also software tools available, like Free File. According to the IRS, if you made $57,000 or less, you qualify for this free software which will take care of the challenging work involved with filing your return and can be accessed at www.irs.gov. If you surpassed this income bracket or would prefer to do your own return, you can access online fillable forms, which are simply the IRS paper forms in electronic format, at irs.gov as well. Take some time to research and determine the best option for you, based on your financial situation.
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