Do you find tax filing stressful? Are you sure you know all the things, which you’re eligible, to increase your tax refund? Most of us don’t know all the things which we need to list to boost our tax refund. So, not knowing these things result in losing money. Here are some deductions which you can claim to boost your tax refund. Check out the 2017 deductions so that you can plan accordingly.
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Source: The TurboTax Blog - Intuit
Contributing to your retirement accounts is one of the smartest tax moves you should consider to boost your tax refund. If you’re contributing to a traditional or Roth IRA, the maximum amount you can contribute is $5,500 for tax years 2016 and 2017. And, if you’re 50 years of more, you can make an extra contribution of $1,000.
If you’re depositing in a traditional IRA, then you’ll get a good tax deduction. However, if you’re depositing in Roth IRAs, then your withdrawals, at your retirement, will be free of tax. Make sure you make your contributions (of 2016) before the tax deadline of April 2017.
The interest you pay on a mortgage loan is tax deductible. If you qualify the eligibility criteria, you can subtract your interest payment from your income.
If you think that you’re paying more on your mortgage than the current home loan rate, you can decide to refinance your current mortgage loan. However, opt for refinancing only if your current mortgage (which you’re taking out) is at least 1 percentage point lower than your existing one. You can also refinance your mortgage if you’re getting a home loan with better terms and conditions.
Your filing status also determines how much you’ll get as tax refund. For example, if you qualify the eligibility criteria of “head of household” status, then, you’ll be eligible for a much higher tax deduction. For this year, 2017, the standard deduction amount will be $9,350. The standard deduction amount for single taxpayers along with married people filing jointly will be $6,350, which is $50 more than what it was in 2016. The married people filing jointly can enjoy $12,700 tax deduction in 2017; it’s $100 increase from the previous year.
You should know that you’ll qualify for “head of household” status even if you support a dependant or you’re a single parent.
Moreover, if you’re married, then it’s better if you check whether filing jointly or separately is better for you. Filing separately will make more sense if one spouse has quite high medical expenses in the tax year for which you’re claiming refund.
Has there been any changes in your W-4 Form than what you filled out when you first started your job life or changed your job last time? If yes, then you should update it.
For example, you can add allowances if you’re doing a part-time job along with your primary job, your spouse has started working, or you have significant dependant or child care expenses.
You can increase your tax refund if you qualify for EITC (Earned Income Tax Credit). Most of the people, who can qualify for this refund, don’t do it because they don’t know about it. So, check out the eligibility criteria for 2017.
The maximum amount of credit for the tax year 2017 is $6,318 with 3 or more qualifying children.
It is advisable you take help of a professional to file your taxes especially if you have some deductions to claim. A professional can guide you to file your taxes without any error. Also, taxes change from one county to another. So, take this into account if you’re planning to move to a different county or mention this to the tax filing professional if you’ve done that in the last year. Make sure you use your tax refund wisely for a better financial future.
Barbara is a guest blogger from Debt Consolidation Care.