5 Things You Can Do to Get a Bigger Refund

Tax time is all about refunds for many people, and everyone wants to fully maximize their refund. After all, it is your money, and you should be able to get it back. Kaufmann Advisors in San Francisco can help you maximize your refund by taking advantage of all of your applicable credits and deductions. Everyone’s financial situation (and tax situation) is unique, so what makes a big refund for one person may not work out for the next. There are a few things that you can do to try to get a bigger refund—use what works for you!

Consider Your Filing Status Options

For some taxpayers, filing status cannot move much. For married couples, however, they may have a little wiggle room. For many couples, filing married will usually get them the biggest refund. But, that may not always be the case. You should calculate your refund using both options to see which one gives your family the largest refund. For some couples, having the lower adjusted gross income for each member of the couple could lower your total taxes.

For single individuals that have dependents, they may be able to file as head of household instead of single. This status provides a higher standard deduction, which can greatly increase the total amount of your refund. Talk to your tax professional to determine which filing status will work best for you and your unique financial situations.

Consider Timing for Your Deductions

If you want to maximize your deductions, you want to be sure you squeeze in all of your potential deductions before Dec. 31. This can include a variety of deductions, including:

• Medical Expenses. If you are holding off on getting treatments or exams, you may want to go ahead and get those things taken care of before the end of the tax year. You can deduct medical expenses, but they must take up a certain percentage of your total gross income, usually 10 percent. If you are right on the edge, you may want to go ahead and get your medical needs taken care of to make those expenses deductible.
• Mortgage Payments. If you own your own home, your mortgage payments are likely deductible. Making sure that you make your payment before the end of the tax year can help you take advantage of the deduction you can take for those interest payments.
• Paying Taxes. You can also take a deduction for paying your taxes. Consider paying your taxes ahead of time if you have that opportunity so that you can take advantage of the tax deductions available for the tax payments you would have made anyway.

Maximize Your IRA Contributions

If you contribute to a qualifying IRA, you can take a deduction for that as well. You can even contribute to the IRA until April 15 after the current tax year. You can also file early and use your refund money to open up an IRA account. You want to contribute the maximum amount to fully take advantage of the deduction—and this allows you to save for retirement as well!

Take Advantage of the Earned Income Credit if You Qualify

Some Americans do not even consider the Earned Income Credit, but you may want to if your income is low enough. The credit is especially helpful if you have children, but even those who have lower income and do not have children may qualify for the Earned Income Credit.

Credits are generally more advantageous when compared to deductions. This is because they are dollar for dollar, instead of a portion of the income. Other credits that you may want to consider include:

• American Opportunity Tax Credit for higher education expenses
• Lifetime Learning Credit for higher education expenses, which is a little more flexible than the American Opportunity Credit
• Child and Dependent Care Credit for paying for child care or for caring for other dependents, including parents or other family members
• Savers Tax Credit for contributing to special types of retirement savings plans

Consider Changing Your W-4 With Your Employer

When you start a new job, you have to fill out a W-4 form. This form lets your employer know how much they should withhold when they issue your paycheck. If you want to get a bigger refund, you may want to have them take out more from each paycheck to ensure you get money back at the beginning of the new tax year. You turn down the allowances to increase the amount that they take out, making a bigger refund—you turn up the allowances on your W-4 to increase the amount of your take home pay, but that may also decrease your refund.

Everyone’s taxes are slightly different, and what you can take advantage of to increase your refund will vary compared to other people. A tax professional can help you get the largest refund that is available to you. Kaufmann Advisors can help you get your maximum refund. Use the contact button to get started or click on the profile link to get more information.