After Christmas, as the year winds down, we start looking forward to our tax return — maybe to pay off those holiday bills. But you always have to wonder if you’re really getting every dollar you’re entitled to. We all want to make sure Uncle Sam gives us isn’t getting more than he should, but how do you go about it? Here are some tips to help you get the biggest tax return possible. Now you can afford that gym membership for that New Year’s resolution, right?
1. Itemize Deductions, if Possible
If you have any charitable or business deductions, don’t settle for the standard deduction unless you know that’s the best you can do. Look over purchases, save receipts, and add up those deductions. More often than not, you’ll be able to itemize and make your deduction amount bigger than the standard. Charitable giving, unreimbursed business expenses, casualty losses, job search expenses, retirement contributions, home mortgage interest, and more can really up your refund.
2. Claim Every Dependent
If you’ve been supporting a friend or relative financially, did you know you may be able to claim a dependent exception of $4,000? There are rules you have to stick to, but if a non-relative has lived with you for the while year and doesn’t provide over 50% of their own support and doesn’t earn over $4,000 in taxable income for the year, you may be able to claim this one.
3. Use Above-Line Deductions, if You Can
These can help you reduce your taxable income without itemizing. For example: students school supplies, going back to school, alimony, self-employment tax, student loan interest, unreimbursed moving expenses.
4. Earned Income Tax Credits
This represents a dollar-for-dollar reduction of taxes you owe, but a lot of people miss out on it. The earned income tax credit is worth up to $6,318 for a family with 3 or more qualifying children. One of five eligible taxpayers don’t claim this one, so check your own eligibility. If you made less than $53,930 of “earned” income (this doesn’t include things like unemployment benefits), you may be eligible. The above number is the 3-child threshold…your threshold may be different. Check with your accountant, then send him or her a card for getting you such a big check!
Itemize Deductions, if Possible:
Claim Every Dependent:
Take Above-Line Deductions:
Earned Income Tax Credit: