Getting a big tax refund can feel like it's Christmas in the springtime. With a sudden boost in your bank account balance, you may find yourself looking forward to getting caught up on bills, debts or even a much-needed shopping spree. No matter what you decide to use the money on, there are some things to try in order to get the biggest return on your taxes possible. While you are not able to fully control how much you pay or get back during tax season, there are some ways to make sure you get the most you deserve.
Your filing status can have a dramatic effect on your tax return. This can affect the amount you get back, especially if you are married. Most married people file jointly without even thinking about it. For some married couples, however, it will be better to file separately and could result in bigger refunds. Consider calculating filing both separately and jointly to see which way offers the most for your return.
When a single parent is filing their taxes, claiming dependents can significantly cut their taxes owed. The key to getting the best cuts in this scenario is to file yourself as the head of the household. To be eligible for claiming a dependent, you will need to have one or more of your children living with you for at least six months of the tax year you are filing for. You must also have paid for more than half of the cost of keeping your home to be eligible for claiming dependents. These costs include rent, utilities, mortgage, repairs, food and renter's insurance costs.
Many single-filing adults help to take care of their aging parents. A lot of these taxpayers have no idea they may be eligible for tax cuts for doing so. If you have paid more than half of the cost of maintaining your parent's residence during the tax year, you may be able to claim head of the household status and take advantage of the great tax benefits that come along with it. Your parents will not need to live with you. They may live in their own home or in a senior living facility.
Unless delayed because of a holiday or weekend, taxes need to be filed by April 15th. This means you have until that day to open up a new traditional IRA for the previous year you are filing for. Once you do, you are going to be able to claim the IRA contributions credit on your taxes. You will also get the added benefit of getting credit for filing it early and using part of your refund for opening the new account. Your taxable income is reduced when you make contributions to a traditional IRA account. If you also made contributions to a Roth IRA, you might be able to lower your taxable income even more by claiming the retirement savings contribution credits. This will make a big impact on the amount of refund you will be able to claim.
Timing can affect your tax refund. Taxpayers who monitor the calendar can use it to their advantage and gain themselves a larger refund. If you are able to afford it, pay your January mortgage payment before the end of the year. When you do this, you will be able to add the interest paid to your mortgage interest deductions. Additionally, try and get your annual health screenings done by the end of the calendar year to boost your potential medical expenses deductions.
Your property taxes are another area to think about when you are coming to the end of the calendar year. For some filers, the addition of paying your property taxes by December 31st could make the difference between using the standard deduction or being able to itemize your deductions. If you have enough to itemize, you could stand to get a larger refund because of it. If you are close and want to add more to your itemized list, try paying the property taxes that are due in January by the end of the calendar year. This will increase your itemizing potential.
Substantial tax savings can be made when you deduct for charitable donations. The more you donate, the bigger refund you might be able to get. All types of charitable donations are eligible to use for lowering your overall tax bill. The one restriction to take into consideration is that all nonprofits need to have 501(c)(3) status.