Who doesn't want to see an increase in their tax refund? Refunds are always a great thing, but being disappointed by the number on the check happens more often than not. To avoid feeling ripped off by the government, discover the ways to increase your next year's tax refund now.
We have come up with 10 tips anyone can take advantage of in order to see a higher number on their refund check. Let's get started now. What're you waiting for?
Keep track of deductions.
Like anything to do with your finances, you should constantly keep track of your history and information throughout the year. Specially, you should keep track of deductions by preparing a file.
Every time you see something during the year that's tax deductible, add it to your file. Just be sure to label it something along the lines of "Tax Info 2018." You can increase your next year's tax refund now by starting the process of maximizing the itemized deductions on your 1040 right away. Some of these deductibles include student loan interest, childcare, college courses, and charitable contributions. Just be aware that certain deductibles have been removed as of 2018, as a result of the new tax reform law.
Contribute to your future.
A great way to increase your next year's tax refund now, as well as plan for your retirement, contributing to your future is never a bad idea. To get multiple benefits, you have until the filing deadline to contribute to an IRA. So why not start now?
You could potentially benefit from a tax deduction of up to $5,500, or $6,500 if you are over 50 years old. Contributing to your retirement can also qualify you for saver's credit, which can provide an additional credit up to $1,000 for contributing to your future.
Claim your relative or friend if you are supporting them.
While you may be familiar with the general rules for claiming your child on a tax return, did you know that you may be able to claim a relative other than your child? You can even claim friends you might not immediately recognize that you're supporting — claim anyone you have been supporting financially. You may be able to get a dependent exemption of over $4,000. This is deducted from your income.
If a friend has lived with you for the entirety of the year, this deduction may be legitimate. This is also true for relatives that do not need to live with you, but are providing more than half of his or her own support, earning less than $4,050 in taxable income. This can also refer to supporting a boyfriend or girlfriend.
Reduce your allowances.
Reduce your allowances by reviewing the allowances you claim at work. Especially if you've owed money in the past, it's time to reduce your allowances and increase your income tax withholding.
You paycheck will be less, but it will be worth it in the long run. The payoff will come spring, and as one of the best ways to increase your next year's tax refund now — you won't owe taxes, and instead you'll get a refund next spring.
This is a small but important step to take. Though the actual deadline for your taxes might not be for months, it can be argued that doing so earlier rather than later is beneficial. If you are expecting a big refund, especially after taking our previous steps to increase your check, this is important to do.
The faster you file, the faster you'll get your check. Another great reason to do this is to avoid thwart thieves or prevent financial records from being exposed. Last, year over 174 million records were exposed. Once a thief gets a hold of this information, you can say goodbye to your refund. So the sooner you get your hands on your refund, the easier you can avoid theft.
Be aware of medical tax perks.
This is something most people forget: if you have spent a great deal of money on medical expenses, you can claim a deduction. As a great way to increase your next year's tax refund now, this applies to those who have spent at least 7.5 percent of your income on medical expenses.
This can range from doctors fees to insurance premiums or even smoking cessation programs, guide animals, and transportation costs.
If you work remotely, you can file for a deductible.
If you work from a home office space, or dedicate an apartment or home to use for business regularly, you can deduct a portion of your expenses. These expenses can include rent, insurance, repairs, utilities, and more. However, you must prove that this space is entirely dedicated to business use.
File for free.
Believe it or not, you can file for free, no matter your money situation. If you make below $66,000 annually, you should not be paying for tax filing. However, depending on the tax software you use, your income shouldn't matter. Some of the best free online tax software includes TurboTax, H&R Block, TaxAct, and eSmart Tax. As a small way to increase your next year's tax refund now, why not get rid of one more expense?
Include the dependent care credit.
Based on a percentage of the amount you pay for the care of your child or dependent, you can gain a child and dependent care credit. Capped at $3,000 for the expenses of one individual, the care credit can also expand to $6,000 for two or more individuals. This is a requirement to deduct if your employer offers dependent care benefits.
To do this, you are required to file a joint return if you are married. However, you can also qualify if you are unable to use a caregiver who is a spouse or parent of the child, if you have an SS number added to your return, or simply if you provide the name, address, and SS number of your caregiver.
To complete the best ways to increase your next year's tax refund now, we suggest donating. As an act that keeps on giving, donating to charity by cleaning out your closet is a quick way to receive a tax deduction. This can be done by receiving a tax deduction for the fair value of any unwanted household goods.
This can also be redeemed from thrift shop value. You can also donate books or magazines you give to the library. Just be sure to track all of your charitable donations. This can be done through a platform such as Turbo Tax.