When it comes to a tax return most Americans want to know how to get more money. There are definitely things that can be done to get the most from your tax return. Here are some easy hacks that anyone can use to get more money back on their tax return.
Money Hack 1: Knowing Your Deductions and How to Claim them on Your Tax Return
Deductions are an important part of getting the most from your tax return, they reduce the amount of taxable income you have. Deductions are essentially the way the government decides how much of a person’s income to give back. Here are few categories of the common types of tax deductions to know about and claim to get the most money from your tax return:
Deductions for Life Changing Events
When it comes to taxes major life changing events count as a change in marital status (whether newly married or newly divorced) and any changes in occupation, from getting a new job to losing one. If you start university, there are deductions for that as well. There are also deductions for having a new child being born into a home or adopted into a home. If a person is a new home owner there are deductions for that as well.
Deductions for Homeowners
There are a ton of tax deductions for homeowners. Here are a few things that come with buying a home that can be deducted:
- Interest paid on a mortgage
- Property taxes paid
- Any energy saving improvements made to the home
- Mortgage changes/canceled debt on a mortgage
Deductions for Employees or for the Self- Employed
Any expenses that are used for the purposes for work or in other words to make income can be filed as a deduction. For those who are self-employed or for those who travel a lot for work related reasons could get an extremely large deduction on their tax return. So make sure to keep track of those expenses and include them.
Deductions for Medical Expenses
Medical expenses such as hospital stays, medication, dental, vision, and hospital fees may be claimed as deductions on a tax return. Keep in mind that the deductible will only count if the expenses are more than 7.5% of your income.
Deductions for Charitable Donations
If you are someone who regularly donates or have donated to charities then that is generally tax deductible. For those who work a charity there are deduction in there as well. For example driving a vehicle for charity- the mileage can be deducted (this works similarly to work expenses)
Claiming Deduction- Taking Advantage of Itemized Deductions
Deductions are claimed in two ways: itemized deductions and standard deductions. Itemized deduction-are ones that you choose yourself and standard deductions- are a number given from the state. For those who know they have a lot of deductions it is often best to go with itemized to get the most from your tax return. For people who don’t have a lot of deductions to fill in, then the state’s estimate is probably accurate.
Money Hack 2: Check Your Credits the Get the Most Money from Your Tax Return
Unlike tax deductibles- which determine our taxable income, tax credits can directly impact your tax return. These credits can greatly impact how much money you will pay in taxes. So to get the most money from your tax return you need to know what tax credits you qualify for. Here are a few categories of tax credits to look out for:
Family Tax Credits
These tax credits are available for those who have children or dependents- whether adopted or biological.
Income Tax Credits
The income related credit is known as the Earned Income Tax Credit. For those who have a low income, this credit can be claimed.
Student Tax Credits
For students pursuing education after high school there are two major credits that they may qualify for. The American Opportunity Credit and the Lifetime Learning Credit (although only one will be awarded for each year). Because the costs of attending school in the United States is almost equal to a mortgage- this credit can be substantial.
Money Hack 3: To Get the Most Money, Let a Professional handle Your Tax Return
Filing taxes can be confusing and mistakes could mean penalties and paying more money. So instead of attempting taxes yourself it is often best to go with a tax professional-even with the fees attached- when filing a tax return. There are generally two ways to seek professional help:
- Through a Tax Filing Company/Business- This is usually done in person- bring in all of your tax information and the business will do all the hard work for you. Just make sure to find a reputable business before handing over that important personal information.
- Through Tax filing Software- There are many reputable and secure software programs out there to file taxes online. Through them taxes can be filed at any time from the comfort of home. The software guides the user through their return by asking a series of questions.
When filing your tax return there a few hacks out there get the most money from your return. To get the most this year make sure to: know what deductibles to claim and take advantage of itemizing deductions, knowing your tax credits, and filing with a professional. Using these three hacks may help anyone get more money from their tax return and help prevent mistakes.