4 Tax Season Preparation Tips to Maximize Your Refund
It's tax season—the time of year when kitchen tables become a mosaic of income forms, crumpled receipts, and home to a small family of misshapen stress balls. Procrastination soon sets in as the daunting task of sorting through the past year's financial activities becomes too much to bear. But putting off preparation until just before the deadline can lead to valuable tax deductions and tax credits slipping through your fingers.
Here’s how you can help secure a larger return from Uncle Sam this year.
1. Pick the Right Filing Status
Your filing status, whether filing jointly with a spouse or separately, can affect your tax refund. Standard deductions and tax brackets vary depending on your filing status, so choosing the most beneficial status is vital for maximum savings. Consider your combined income, deductions, credits, and other tax scenarios to see if filing jointly or separately will lower your taxes. Consult a tax professional if needed.
2. Take Advantage of Tax Deductions and Credits
Significant life changes such as getting married, having a child, or experiencing a job transition can all have financial repercussions that extend to your taxes. Such changes might make you eligible for various tax deductions or credits. Deductions can lower your taxable income while tax credits can be subtracted directly from your tax bill. Look into credits like the Child Tax Credit or the Earned Income Tax Credit to see if you qualify.
3. Review Your Expenses
Did you spend more on medical expenses compared to prior years? If your healthcare costs have jumped and exceed a specific portion of your adjusted gross income, you may claim a medical expense deduction for that tax year. Keep in mind that when you itemize your deductions, you will need to complete an additional IRS form detailing qualifying expenses.
Taxpayers can also deduct expenses related to:
• Opening a business
• Charitable donations
• Home equity loan payments
• Unreimbursed classroom expenses for teachers
Internal Revenue Bulletin: 2023-48 contains a detailed description of these and other expense deductions.
4. Check the IRS News Releases
Visit the IRS website regularly, especially the News Releases section, which provides the latest tax law amendments and guidelines. Staying alert to updates—including changes to deductions, credits, and retirement contributions—can prevent you from missing tax-saving opportunities.
Begin your preparation early so you can navigate this tax season with confidence and efficiency. Your future self, and your wallet, will thank you for it.