With this year's tax deadline looming (April 17, FYI), many of us are scrambling to get our documents in order. And nothing can ruin those Saturday vibes faster than having to hunt for misplaced receipts. While filing your taxes is never fun, getting a big fat tax refund certainly is! So here are five 2018 tax hacks to get the biggest return.
Perhaps the smartest thing you can do come tax time is to file early — resist the urge to procrastinate until the last minute. That's because the sooner you file, the sooner you can (potentially) get a refund, and the sooner that refund money can go to work for you, explained Money Tips. Plus you'll have time to ask questions if you're unsure of how to handle certain fields.
If you opt to get your tax refund as a direct deposit, it can seem kind of crazy to all of a sudden see a sizable chunk of cash in your bank account. But it makes sense to skip the spring shopping spree, especially if you accumulated some credit card debt over the last year. "If you receive your tax refund soon you can pay down your debt earlier and eliminate some of the interest charges," explained U.S. News & World Report.
So what are some things you can do to maximize the size of your tax refund? Here are five tips to get the most back from Uncle Sam!
1Itemize While You Still Can
When President Trump passed the tax bill at the end of 2017, many people wondered how it would affect their 2018 taxes. Thankfully our 2018 tax filings will be largely unaffected, according Elite Daily.
But since the legislation will have gone into affect by next year's (2019) tax season, this is the last year, for many people, to optimize things like itemizing. That's because starting in 2019, the standard deduction will essentially double. It will go from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples filing together, according to the same Elite Daily article.
So that means this could be the last year it makes sense to itemize to your advantage. "[The standard deduction increase] will make using itemized deductions like the mortgage interest or charitable deduction much less useful for many people who currently itemize," explained Lisa Greene-Lewis, a CPA at TurboTax in an interview with Mic.
2Take Above-the-Line Deductions
If the thought of providing all the receipts necessary to itemize sounds too cumbersome, consider taking above-the-line deductions instead (if you're eligible).
Above-the-line tax deductions allow you reduce your taxable income without itemizing, according to U.S. News & World Report. Some above-the-line deductions include paid alimony, paid student loan interest, and contributions to your IRA, but you can consult a 1040 form for a complete list of qualifying deductions.
3Contribute to your Retirement Savings
Contributing to a retirement plan, like an IRA, can earn you a tax deduction that lowers your taxable income, according to Mic.
The best part is that it's still not too late to make an IRA contribution to go towards your 2017 taxes. "You can continue making IRA contributions that count toward 2017 all the way through April 17, 2018," explained the same Mic article.
4Check to See if you Qualify for Credits
While many people focus on finding tax deductions, it turns out, it may be worthwhile to research what tax credits you qualify for as well. "Tax credits directly reduce your tax bill, while deductions reduce your taxable income and therefore save money in proportion to your tax rate," explained Money Tips.
Some common tax credits include the Child Tax Credit (up to $1,000 per child) and the Child and Dependent Care Tax Credit (up to $3,000 in expenses for a single qualifying child/dependent and $6,000 for two or more), according to a related Money Tips article.
For a comprehensive list of tax credits, click here.
5Seek Professional Help
If you get a headache just thinking about doing your taxes, take heart, there are people who can help. The IRS website offers a list of resources (some free) that can help you get and stay on track.
Additionally, in some cases, hiring a professional may be the move. "If your tax situation is complex and you don't have the time, patience, or ability to maximize your tax return, seek the advice of a competent tax professional – but do your research first and be skeptical of broad claims," advised Money Tips.
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