Refund season is in full swing. This is the time the majority of taxpayers are filing their taxes so they can get their tax refund. According to the IRS, about 75 percent of taxpayers received a tax refund close to $2,800 last tax season. But some of you may feel like your refund was a little low.
Whether you received the tax refund you deserved last year or think you could have gotten back more, here are five tips to help you maximize your tax refund this year.
Don’t take the standard deduction if you can itemize. The standard tax deduction ($6,350 for singles and $12,700 if you’re married filing jointly in 2017) is a deduction set by the IRS that allows you to reduce your taxable income if you cannot take advantage of more tax deductions by itemizing. Although standard deductions will help lower your taxes, if you take a little time and gather up some of your receipts, you may find you can itemize your deductions to get a bigger tax refund. Some additional expenses such as charitable contributions, casualty losses, unreimbursed business expenses, job search expenses and the state and local sales tax deduction may push you over the standard deduction.
[Read: How Tax Reform Impacts Homeowners.]
Claim your friend or relative you’ve been supporting. If you have been supporting your friend, significant other or relative, you may be able to get a dependent exemption of $4,050, which is deducted from your income. There are some rules regarding non-relatives and relatives, but the deduction is legitimate if your non-relative has lived with you the entire year (relatives don’t need to live with you), doesn’t provide more than half of his or her own support and doesn’t earn more than $4,050 in taxable income.
Take above-the-line deductions if eligible. Above-the-line tax deductions allow you reduce your taxable income without itemizing. Examples include if you paid for your students’ school supplies, went back to school to land that promotion, paid alimony, pay self-employment tax, paid student loan interest, contribute to your IRA or had unreimbursed moving expenses. The reduction to your taxable income may also help you get a bigger advanced premium tax credit if you received assistance to help pay for insurance in the health insurance marketplace.
Don’t forget about refundable tax credits. A tax credit is a dollar-for-dollar reduction of the tax you owe, and a refundable tax credit will allow you a credit beyond your tax liability. The earned income tax credit is an often missed tax credit worth up to $6,318 for a family with three or more children. One out of five taxpayers who are eligible for it fail to claim it, according to the IRS. Some taxpayers miss this valuable credit because they are newly qualified due to changes in their income. Or they chose not file their taxes if their income is below the IRS income filing threshold ($10,400 if you’re single or $20,800 if you’re married filing jointly).
[See: 10 Smart Ways to Spend Your Tax Refund.]
Contribute to your retirement to get multiple benefits. You have until the filing deadline to contribute to an IRA and reap the benefits of a tax deduction of up to $5,500 ($6,500 if you are 50 or older). In addition to this deduction, you may qualify for the saver’s credit. This is the only time the IRS allows you to double dip. The IRS gives you an additional credit of up to $1,000 ($2,000 for married filing jointly) if you contribute to your retirement.
These tax tips will help you maximize your tax refund and allow you to spend it wisely whether you are paying down debt, saving it for a rainy day or building up your nest egg.
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How to Get the Biggest Tax Refund This Year originally appeared on usnews.com
Update 04/06/18: This article was originally published on Feb. 2, 2016 and has been updated to include new information.
