Ways to Maximize Your Income Tax Refund
Everyone loves to pay fewer taxes, but the truth is that most of us usually pay more than we want to and get back less of a refund than we'd prefer. Things often end up this way because we spend too much time focusing solely on taking care of our taxes as quickly and as efficiently as possible. Sometimes we overlook the little loopholes or the gray areas where we could be saving money. Below are some ways you can make things easier and hopefully maximize your income tax refund.
Tax Records – Always have a specific place you keep your tax related items and have them organized. Make sure all the figures you have are updated at all times. Double check to see that no deduction you may be able to take is missed. If you do this, it will take less time to file the return, and you will have all the information to answer questions that the IRS could ask. Remember, if you are not able to answer anything on your return to the IRS, it can cost you more tax money as well as penalties.
Entertainment – Pay close attention to the entertainment expenses you claim on your refund. Remember that under no circumstances can you claim a deduction against your entertainment expense. If you don’t want to end up with a tax liability on the assessment, make sure your employer knows about the laws in regards to allowances for entertainment, and that they have taxed those completely. In some circumstances you can be allowed to have a 50 percent deduction if the entertainment expenses are things like business meals.
Medical/Dental – If you have a lot of medical expenses and your insurance didn’t cover those, keep the invoices as well as statements so you can use them as a deduction. If you really want to find ways to increase your refund, you need to keep in mind that health and dental insurance premiums can be taken into consideration for a deduction up to 7.5 percent of your income. If some of the medical expenses aren’t deductible, you can treat them instead as legitimate business expenses.
Travel – A detailed and accurate mileage report is something you need to keep up to date. Travel deductions are something the IRS scrutinizes fairly well. Remember that if you are working at two different jobs, you are not allowed to claim the mileage traveling from one job to another. If you only have one job, you cannot claim the mileage from your home to the office. That expense is personal. But if you do business in your automobile while working, you can claim that expense. Other things you can deduct for travel are car rentals, hotels, tips, tolls and airfare.
If you take advantage of some of the tips above, you will be able to take advantage of the breaks for which you're eligible and maximize your refund. The IRS booklets are good to pick up and read now and again; that way, you can stay up to date on all the new tax laws as well as the tax breaks that you can use to your benefit.
The author is participant of MVAA contest on this site. Help the author win Rs.1000 by sharing this article with others. To participate and win Rs.1000 prize money in this contest click here
Everyone loves to pay fewer taxes, but the truth is that most of us usually pay more than we want to and get back less of a refund than we'd prefer. Things often end up this way because we spend too much time focusing solely on taking care of our taxes as quickly and as efficiently as possible. Sometimes we overlook the little loopholes or the gray areas where we could be saving money. Below are some ways you can make things easier and hopefully maximize your income tax refund.
Tax Records – Always have a specific place you keep your tax related items and have them organized. Make sure all the figures you have are updated at all times. Double check to see that no deduction you may be able to take is missed. If you do this, it will take less time to file the return, and you will have all the information to answer questions that the IRS could ask. Remember, if you are not able to answer anything on your return to the IRS, it can cost you more tax money as well as penalties.
Entertainment – Pay close attention to the entertainment expenses you claim on your refund. Remember that under no circumstances can you claim a deduction against your entertainment expense. If you don’t want to end up with a tax liability on the assessment, make sure your employer knows about the laws in regards to allowances for entertainment, and that they have taxed those completely. In some circumstances you can be allowed to have a 50 percent deduction if the entertainment expenses are things like business meals.
Medical/Dental – If you have a lot of medical expenses and your insurance didn’t cover those, keep the invoices as well as statements so you can use them as a deduction. If you really want to find ways to increase your refund, you need to keep in mind that health and dental insurance premiums can be taken into consideration for a deduction up to 7.5 percent of your income. If some of the medical expenses aren’t deductible, you can treat them instead as legitimate business expenses.
Travel – A detailed and accurate mileage report is something you need to keep up to date. Travel deductions are something the IRS scrutinizes fairly well. Remember that if you are working at two different jobs, you are not allowed to claim the mileage traveling from one job to another. If you only have one job, you cannot claim the mileage from your home to the office. That expense is personal. But if you do business in your automobile while working, you can claim that expense. Other things you can deduct for travel are car rentals, hotels, tips, tolls and airfare.
If you take advantage of some of the tips above, you will be able to take advantage of the breaks for which you're eligible and maximize your refund. The IRS booklets are good to pick up and read now and again; that way, you can stay up to date on all the new tax laws as well as the tax breaks that you can use to your benefit.
The author is participant of MVAA contest on this site. Help the author win Rs.1000 by sharing this article with others. To participate and win Rs.1000 prize money in this contest click here
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