The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.
5 Hidden Ways to Boost Your Tax Refund
Expecting a tax refund? Make filing your taxes an exciting task and learn about ways that can potentially help you get more out of your tax return, so you can get more money back!
Tax time is just around the corner. Wouldn’t a big tax refund come in handy? Well, here are steps you can take now to boost your tax refund when you file after the first of the year.
1. Itemize Your Deductions
The standard deduction is $12,400, so it’s tempting to claim it rather than tracking down receipts and tax forms so you can itemize your deductions. But itemizing might be worth it if you are a homeowner with a sizeable mortgage, gave money and donations to charity or paid points when you took out your mortgage. If you are an educator, you can deduct up to $250 of school supplies even if you don’t itemize deductions. Start gathering information right away so you’ll have everything ready at tax time.
2. Claim Education Expenses
If you are paying college expenses for yourself, your spouse or a child, two education credits can help defray those costs: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC is a partly reimbursable credit for 100% of the first $2,000 of education expenses you pay and 25% of the next $2,000. The Lifetime Learning Credit (LLC) is 20% of the first $10,000 of education expenses. The AOTC is eliminated once your income exceeds $90,000 and the LLC at $68,000. There are other differences as well, so weigh your options carefully in deciding which credit to claim. Start gathering the data you’ll need to claim the deduction and consider prepaying tuition or other costs to get the maximum credit possible.
3. Claim Credit for Your Full House
If your adult children, their significant others and friends have come to live with you, you may be eligible to claim a $500 tax credit for non-child dependents whom you support if their income is less than $4,300. You can claim the credit for parents whom you support even if they don’t live with you. Stick a note into your tax file (you do have a tax file, don’t you?) reminding you to look into claiming these credits at tax time.
4. Contribute to Tax-Deductible Retirement Accounts
This is a way to save for your future and boost your tax refund. If your income is under $65,000, you may qualify for a Saver’s Tax Credit as well. Those are three different benefits from the same action. Make contributions to your 401(k) by the end of the year — though you have until the tax filing deadline to contribute to an IRA. If you are claiming the Saver’s Tax Credit, do that by year-end as well.
5. Deduct Worthless Investments
If you have any investment that went belly-up, sell it before the end of the year and claim a tax loss. If someone owes you money that you can’t collect, you can claim that as a bad debt deduction as well. Write a description of the debt that includes the name of the debtor, the amount and the date the debt was due, along with any relationship between you and the debtor. Describe the efforts you made to collect and why you think the debt is now worthless.
Bonus Tip: File Your Tax Return on Time
You won’t get a tax refund until you file your tax return. But really, even if you aren’t required to file a tax return because your income is low, file anyway to claim your refund for taxes withheld and any refundable credits you are entitled to. If you wait more than two years to file, the IRS will not issue you a refund.
The information in this article for general educational purposes only and not intended to provide specific advice or recommendations. Please discuss your particular circumstances with an appropriate professional before taking action.
1The Desert Financial discount only applies if you use our links above to access their sites. Desert Financial Credit Union is not affiliated with TurboTax or Intuit. Desert Financial Credit Union makes no warranties or representations about the services provided by TurboTax or Intuit, and accepts no liability for the use of such products or services. If you plan to electronically deposit your refund into your Desert Financial account, be sure to provide our routing number (122187238) and use your account number on your tax return. To find your account number, log into online banking, select the account you want and click the “details” link next to the “Account Information” section. The information you need for direct deposit, check ordering and wires is located there for your convenience.