Being financially savvy all comes down to planning ahead. Most Americans like to procrastinate as much as possible when it comes to taxes. That usually means that we don’t even begin to think about filing our tax returns until that infamous April deadline is about to come around. However, that’s not a smart way to operate. The reality is that you can actually keep more of your own money and get a bigger refund if you start planning your strategy for tax season long before it arrives. Do you want to know how to start boosting next year’s tax refund right now? Take a look at some simple tips for what you can start doing today to increase your refund and enjoy a happier tax season next time around.
Start Keeping Impeccable Records
Many people who work for themselves or own small businesses miss out on deductions because of poor bookkeeping practices. Even people who don’t own businesses miss out on deductions throughout the year because they don’t have a good system in place for keeping track of things. Get an empty folder today and start using it to store receipts for things that are deductible. This can include everything from mileage expenses to childcare costs. You can also use an app or online notebook that tracks deductible expenses or allows you to upload copies of receipts.
Take a Second Look at Your Withholding Allowances
Do you keep falling into the trap of owing money at tax time? It might be time to take a look at the allowances you’re claiming. You may be able to reduce your allowances and get a refund instead of being forced to pay money to the IRS next tax season. Of course, this will mean that you will take home slightly less money each pay period. You can get started by simply asking the appropriate person from your employer’s human resources department for your W-4 form.
Lower Your Taxable Income the Smart Way
The smartest way to lower your taxable income is by putting more away for your future. Did you know that you can contribute up to $19,000 to your retirement fund as a way to lower your taxable income? Self-employed tax payers can contribute to a special Simplified Employee Pension (SEP) IRA. Your contribution may be deducted as a business expense in some cases.
Assess Your Credits and Deductions
Many of us try to cram all of our tax-related research into just a few days leading up to the filing deadline. Why not make a plan to research what you could be eligible for far in advance this year? This will help you to go into tax season fully prepared. The IRS offers dozens of deductions that could apply to your situation. That includes things like the Earned Income Credit, the Child Tax Credit, the Child and Dependent Care Credit, the Lifetime Learning Credit and the American Opportunity Tax Credit. You may actually be leaving money on the table every time you file without looking into whether or not you qualify for any of these available credits.
It All Starts Today
Don’t wait for tax season to sneak up on you before you start thinking about how to end up with more money. Preparing now will ensure that you can approach the situation with a cool head and avoid missing opportunities or making mistakes. Having the required knowledge and a plan for action will help you to be your own best advocate when it comes to boosting next year’s tax refund.
SOURCES:
https://www.policygenius.com/blog/6-ways-to-boost-your-tax-refund/
