Tax season with all its seemingly never-ending stressors can make for a difficult and demanding period of time. However, amid all of the chaos of tax season, certain silver linings can help keep you motivated. There may be no greater motivation to endure through tax season than the prospect of receiving a tax refund at the end of the filing period.
What is a Tax Refund and who is Eligible for Receiving One?
Before we outline the best strategies that one should implement into their tax plan if they wish to maximize their return, it helps to know what exactly a tax refund is and how you, as a taxpayer, can go about receiving one.
A tax refund is the amount of money that the Internal Revenue Service (IRS) issues to a taxpayer when the taxpayer in question has paid more taxes to the government than they owed for the year. Why and how does this happen? There are a few different causes. For instance, one of the most common causes prompting a tax return occurs when a worker has had too much money taken out of their paycheck each week. This is because the amount withheld only estimates your tax but does not include all the credits and deductions you will claim.
There are also scenarios where a tax credit can create a refund for you, even when you’d otherwise owe taxes. This occurs because some tax credits are refundable, which means that if the credit amount exceeds the total tax you owe for the year, the IRS will give you all, or a portion, of the credit in the form of an actual cash refund.
Given the aforementioned, any taxpayer can be eligible for a tax refund. They just have to meet the proper criteria. This means that your tax return eligibility can change each year based on extenuating factors.
How to Purposely Boost Your Tax Refund
While your knee-jerk reaction after completing your yearly tax filings might be to temporarily disconnect from all things taxes, keep in mind that the choices you make today will impact your potential tax return for next year. As a result, it’s never too early to start thinking about next year’s tax season and that includes brainstorming ways to get more out of your return.
If you’re interested in maximizing your future tax returns, here are a few actions that you can take to ensure you’re getting the most bang for your buck.
#1- Contribute regularly to your retirement and health savings accounts: The good news about contributing to your tax-deductible accounts is that you can start doing so immediately. If you have a traditional IRA or health savings account, make sure that you’re regularly depositing funds into them. You can contribute to these accounts year-round, right up until the tax filing deadline, making it a highly lucrative practice.
Not only are there tax-related incentives to be gained from contributing to these accounts, but they also help to improve your financial future regardless of potential refund benefits.
#2- Learn about your eligible deductions and choose the right option: Everybody loves a good tax deduction, and you might be surprised to learn that there are actually numerous possible deductions that you may be eligible for. However, taxpayers often cheat themselves out of maximizing their deductions, because they don’t take the proper time to research which deduction is the most lucrative for them. Just because a specific deduction is popular amongst taxpayers, doesn’t mean it’s the most advantageous for you. You can learn about your options by conducting a simple Google search. However, you might want to consider enlisting the help of a professional whose job it is to know all about varying deductions. They can help you find the best option in the shortest amount of time.
#3- Assess your filing strategy: Don’t be afraid to explore your options when it comes to filing strategically, especially if you are married. While some married couples will conclude that it is still more advantageous to file as individuals, many couples will find that their total net refund stands to be significantly larger if they file jointly. Again, whether or not filing jointly is the right decision will come down to several different factors, but these options should be explored either way so that you can determine the best course of action.
#4- Donate to a Charity: If you’re looking to find a way to maximize your tax refund that also stands to benefit others in the process, look no further than donating to a charity. Not only does it benefit you as a taxpayer, but it also stands to benefit those on the receiving end of your gratitude. While many taxpayers are aware that donating to a charity can provide an opportunity for a sizable tax write-off, here’s something lots of them don’t know; charitable contributions don’t have to be cash-exclusive. Yep, you can actually write off physical goods. For example, donating clothing and furniture to certain organizations like the Salvation Army is considered write-off claimable. Just remember to keep all of your receipts in the process, as without them, your donation cannot be verified, and therefore, eligible.
When in Doubt- Call in the Professionals
In recent years technology has revolutionized how taxpayers approach filing. It’s never been easier to file by yourself, using only a self-guided program. And yet, in spite of these technological breakthroughs, tax firms and accountants still serve as invaluable resources for many taxpayers. This is because professionals have the experience and the knowledge that the average taxpayer doesn’t have. Tax professionals not only help ease the stress that accompanies tax season, but they know which deductions make the most sense for you to pursue, and they can create personalized filing plans to ensure you get the most out of your return.
In this current day and age where everything seems ludicrously expensive, now more than ever, it serves taxpayers to try and get the most out of their return. In most cases, the best way to do this is to enlist the help of a reputable professional who already has the knowledge needed to best assist you.
If you are local to the greater Charlotte NC area look no further than McGrant Tax & Bookkeeping. As a business that has been successfully operating for more than 27 years, we have established ourselves as a firm that Charlotte’s personal and professional tax filers have trusted and relied on for decades. To learn more about the ways that we can help you with personal tax preparation services in Charlotte NC, feel free to contact us today at any of our two locations or visit our website http://mcgranttax.com and book an online or physical appointment.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her attorney, business advisor, or tax advisor concerning matters referenced in this post. McGrant Tax and Bookkeeping assumes no liability for actions taken in reliance upon the information contained herein.
