Even though Americans may vary on how the government uses their taxes, many of us want to pay as little as possible during tax season or even increase our refunds. These tactics go over and above the obvious to provide you with tried-and-true methods of lowering your tax obligation. Having a business tax advisory is of great help if you have a business.
- You should reconsider your filing status:
Selecting a file status is one of the first choices you must make when filing your taxes, and if you are married, it can impact the size of your refund. While over 96% of couples file a combined return each year, it may not be the best choice.
One disadvantage is eliminating some deductions and credits accessible to joint filers when filing separate returns. To optimize your chance of receiving a refund, thoroughly consider your options. Additionally, both spouses must itemize their deductions or take the standard deduction. There is no mixing and matching of the two choices. You will be guided toward a larger refund by calculating your taxes both ways.
- Accept your tax deductions:
You might not be conscious of several deductions, and many of them are frequently disregarded. Your tax refund could significantly change depending on your eligible deductions. They consist of:
- State sales tax – You can determine the amount of state and local sales taxes you can write off using the IRS’s calculator.
- Dividends that have been reinvested- Although this is not a deduction, it can lower your overall tax burden. Include it in your cost basis when dividends from equity funds are automatically reinvested. By doing this, you may be able to lower your taxable investment income when you sell your shares.
- Contribute as much as possible to your IRA and HSA:
For the prior tax year, you will have until the registration deadline to open or add to a traditional IRA (unless the deadline is postponed due to a weekend or holiday). This allows you to file your tax return early, claim the credit, and use your refund to start the account.
When any of the following criteria are true to you, you cannot enroll in an HSA:
- You have additional “first-dollar” health insurance.
- You sign up for Medicare.
- On another taxpayer’s tax return, you are listed as their dependent.
- Filing on time can boost your refund:
Following the calendar increases the likelihood that taxpayers may receive a greater return. Look for donations or payments you may make before the year is out that will lower your taxable income.
