Tax season is here, and it seems there’s never good news about it, until we show up to brighten your day. The truth is, there are still some tricks you might not know that can help increase your tax refund a little.
As you may already know, for millions of Americans, their tax refund is not just extra income, it’s a real lifeline that allows them to live a little more comfortably for a longer period of time.
Especially now that the economic situation is close to disaster, and unexpected expenses always arise when you have kids… working parents have seen tax season as an opportunity to recover some of what they contribute to the government through the IRS, and yes, there are legal and simple ways to increase your refund, and that’s why we’re here today, to give you a hand so you can take on this season as a financial strategy. Here we go.
Does marital status matter?
And more than you might think. One of the most common mistakes when filing your tax return is choosing the wrong filing status. Many couples choose to file jointly without first calculating whether it benefits them or not. For example, when it comes to medical bills, you can only deduct 7.5 percent of them from your Adjusted Gross Income (AGI), so filing separately could actually be more beneficial in these cases.
However, filing jointly also has its advantages, since it allows you to qualify for other types of deductions and credits for married couples who file jointly.
Keep everything documented
Many people think that handling everything in cash protects them from the IRS, but how true is that? We’ll tell you right now: it’s not true. The IRS can decide when to conduct audits, so if they audit your cash income and it wasn’t reported, you could lose a large part of your refund.
The IRS receives copies of all 1099 and W-2 forms issued, and if your income doesn’t match their data…
So be careful with cash income, even if you earn little, report it, because it’s mandatory. Trying to be clever could end up being very costly.
Don’t mix business and personal
Balancing personal and professional life can be very difficult, and it’s easy to mix personal expenses with business ones. Here’s a tip: separate your expenses into different accounts, credit card, checking account, and savings. Keep all your receipts, from the simplest tickets to the most important invoices.
Accounting system: essential
Keeping everything recorded protects you if the IRS raises any questions, and in many cases, it allows you to access deductions in a safe and planned way. So something as simple as having everything documented can make a big difference.
Large refunds might seem like a good thing, but they actually mean you overpaid during the year, and if you miscalculated… you could end up owing money to the government. So optimize your tax withholding to balance your monthly income! And of course, if you have questions about your tax return, don’t hesitate to contact the IRS or a professional who can guide you. Good luck this tax season!