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Friday, October 30, 2020

How to Maximize your Tax Refund

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Most of us parents look forward to this wonderful time of the year – it is tax season! If you are expecting a refund, you certainly are in anticipation of what you’ll do with that cash from Uncle Sam.

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Perhaps you’ll pay bills or take a much-needed vacation. Maybe you’ll put the money in your child’s education fund, or make a hefty deposit to your own retirement fund.

No matter what you plan to do with your tax refund, wouldn’t it be nice to add a few more bucks onto the amount that you will be getting?

The average tax refund is over $2,600! Wouldn’t you like to maximize that amount? Use the following tips to maximize your refund and get the most money you can get.

Child Tax Credit

It is the credit that all parents love. If you’re a first-time parent filing their taxes, you’re in for a real treat with this credit, which allows you to knock-off $1,000 for each child that you have when paying your taxes, or more if you are entitled to a refund.

Your total earned income must not exceed $110,000 if filing jointly, or $75,000 if filing single, to be eligible for this tax credit.

Child and Dependent Care Tax Credit

This credit is designed to provide a bit of relief for the costs of child care. You can claim up to 35% of the money that you spent on child care, up to $3,000 for one child or $6,000 for two or more.

This credit even applies to certain after-school programs and activities. This is a credit available for all tax filers, regardless of their income.

Business Credit

Do you operate a business from home? If so, this could be another deduction that adds up pretty quickly. You can deduct for space that is used in your home solely for your business, equipment that is used for that job and more.

So often people do not file these deductions and lose out on money. Do not be one of those people!

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Purchase Tax Software/ Hire a Professional

One of the biggest mistakes made when filing taxes is doing it yourself. Rather than take a chance of missing out on deductions and money that you could receive, purchase a special tax preparation software or hire a professional. Each of these options should make it easier to get the maximum refund available to you.

A few final tips:

Make sure that you keep all of your receipts, paperwork and other documents together in a safe place throughout the year. When you maintain good records it certainly reduces the amount of time that you will spend on your taxes

If in doubt, the IRS is always available. You can call them or visit an IRS location near you for help concerning deductions.

Do not wait until the last minute to file your taxes. This will cause added and unnecessary stress and make it more difficult to search for all of the deductions that you might be entitled to receive.

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