How to Maximize Your Tax Return

The following post is from FMF contributor Brad Richardson.

Two things in life are a given: death and taxes. No one looks forward to either, but there are ways to make the latter a little less painful. Obviously, seeking a professional opinion is necessary when considering your taxes, but here are some tips on how to maximize your tax return.

Jointly or Separately?

If you are married, you are most likely filing your taxes jointly. This may not be the best way. Calculate your taxes both ways, and see which method will give you biggest return.

Deductions

When it comes to figuring out what you can and can’t deduct from your taxes, many choose to err on the side of caution. While it is better than the alternative, it can also lead to you missing out on some returns.

Keep a record of your deductions, making sure you don’t forget any when the time comes. What you can deduct includes:

• Retirement contributions -- By putting money into your retirement fund, you will be increasing the amount you will receive when that joyous day arrives, and lowering the amount you will be declaring as income. This means your taxes will be lower.
• Health fund contributions -- Not only will having health insurance protect you and your family from exorbitant medical costs, but can save you from having to pay a fee. Sign up before the end of the financial year, and use the money as insurance revenue.
• Expenses incurred when moving for a new job
• Charity work and donations - for example, establishing a monetary value on items donated, or cost of ingredients used to make donated food
• Professional expenses -- If you are a teacher and have had to purchase supplies for your class; Necessary subscription costs not already reimbursed by your business; Union fees; Telephone costs - This can be a business-only telephone, or your personal phone, in which you will receive part paid; Uniforms and travel - These are sometimes deductible; Certain costs from your self-employed business
• Family-related costs -- A number of expenses you incur while looking after your children or elderly parents are deductible. This does not include child support; Alimony payments; Family healthcare expenses
• Eco-friendly expenses -- If you are renovating or improving your home, look for energy-saver appliances and services. Not only will this help the environment and lower your bills (i.e. electricity), but you can receive a deduction or credit for doing it.
• Education -- Those undertaking education courses (college or vocational school) can be eligible to receive a refund for items such as tuition, textbooks, and supplies.

Timing

In order to bolster the amount of money you will get returned to you from your taxes, consider the timing of paying your bills.

• Pay January’s mortgage payment before the end of December to get the added interest
• Have any medical procedures done to use in that year’s medical deductions

As previously stated, this information is inferior to that of a professional accountant, but hopefully they can help you get a back the money you deserve.

Comments

[Ruth]

I don't intend to be rude, but it always irritates me when people talk about a "tax return" in relation to the money they expect to get back from the government. A tax return is the document you file. You are discussing a tax refund in this article.

Some good information, though. I follow the applicable suggestions you give and they do save money.