When filing tax, you can use standard deductions to get some money into your pocket. However, if you take a closer look, you will see that you can take advantage of many other tax deductions and credits that are often missed or overlooked. You can revise your filing status, IRA contributions, check for expenditures that can be used as a credit or increase the amount of deduction and think hard about the ways you can use that money.
How to Get A Bigger Tax Rebate
Think About Your Filing Status
When filing your taxes, your filing status can make all the difference in the world. For married couples, the general recommendation is to file jointly. However, there are some exceptions to this rule.
For example, if you or your spouse have many unreimbursed medical bills, you can actually get a bigger tax deduction if you file separately. In addition to that, if your partner tends to bend the rules, you are better off filing your own tax. That way, you will perhaps claim a lower amount of tax deductions, but be safer if the tax claim becomes the subject of an audit.
On the other hand, if you are single, there are still ways you can qualify for the bigger tax rebate. If you pay more than half of the costs of maintaining your household, take care of your children, elderly, relatives, or non-relatives living under your roof, you may qualify for head of the household status.
Modify Your IRA Contributions
Each month you receive your salary, some part of your earnings will be sent towards your Individual Retirement Account (IRA). The amount that is set aside for your retirement depends entirely on your agreement with the employer and data provided by the W-4 form.
The more money you put towards your IRA contributions, the less you will pay for income taxes. The calculation is very straightforward. The amount of money you set aside for retirement reduces your taxable income and you will pay less in income taxes.
Depending on your agreement with your employer, you can usually change your IRA contributions anytime over the course of the year. Sometimes, your employer may define the particular periods you will be able to do so, depending on the procedures and decisions made by management.
The point is: you are allowed to change your W-4 status. It is also very important to do this on time, before the deadline.
Another thing you should be aware of when deciding on the number of contributions toward your IRA is that there is actually a limit to how much of your earnings can be set aside for the retirement.
Itemize Your Deductions
You can file for the standard amount of deductions, which vary in accordance with your filing status. However, you should try to itemize your deductions whenever possible.
This means you should do a research on which expenses may be deductible from your tax and include them in your calculations. Be sure to keep all of the receipts though, as you will need them to prove your claims if subjected to audit.
The best example is charitable contributions. They are a nice way to help your community and invest in a good cause. However, you should do some research on the charities you contribute to, making sure their status is recognized by the law and that they are issuing valid receipts you can use to increase the tax deduction.
Tax credits are the way to reduce tax you owe. A refundable tax credit will even allow you to go beyond your tax liability. Some of the most common tax credits include child and dependent care credit and credits for your education expenses.
If you are doing some construction work on your home, making it more environmentally friendly and energy efficient, that expense can also be used as a type of tax credit.
Calculate Professional Expenses
If you are using your cellphone for business purposes, you can deduct this costas well. Similarly, if you have bought books, brochures and other literature you use for your profession, these can also be deducted from your tax liability.
If you are running a business in your own home, then the equipment you use may also be a source of tax deductions.
Refinance a Debt
When interest rates start to plunge, many homeowners rush to refinance their mortgages. Not only will you manage to lower your mortgage debt, you will also be entitled to a tax reduction.
By refinancing the original debt, you are starting the entire process over. This means you will start paying the interest again, which is not included in your taxes.
Get Professional Help
If you wish to have everything done properly, you should get professional help. Get in touch with one of their tax experts.
Not only will you get detailed tax rebate calculations, but they will also present you with the best options for dealing with the money you managed to save through credits and deductions.
When you are doing your taxes, you want to make sure you get the most money back possible. Follow the tips we have provided in this article and be sure to study more into the topic so you can get the most value back.
Tags :Income Tax