There's no doubt, tax time isn't fun or anyone. It can be stressful to make sure that your math is all correct, that you've filled out all your forms correctly, and that everything is in on time. And of course, on top of that, there's the stress of owing money to the IRS.
Fortunately, there are lots of credits and tax breaks that may apply to your situation, though if you aren't a professional accountant or tax preparer, it can be hard to know all of your options. Here are some things to watch out for that might give you some quick and easy ways to get more out of your tax return.
Evaluate Your Filing Status
While there are financial benefits for married people to file jointly, if you are married and filing jointly, you might not be taking full advantage of your options in credits. For example, if as an individual you might be eligible for credits or a refund based on your business expenditures, you might not be able to take advantage of all of those refunds if you are filing jointly. In this case, your best option is to use tax preparation software or consult a professional who will be able to help you evaluate all of your filing options to see if the benefits of filing separately outweigh those of joint filing.
Pay Off Your Debts
Student loan debt can make tax season especially difficult. If you owe any money, especially if you owe money to the IRS, you can improve your tax return by paying off any outstanding debts you have to the IRS. Though this may mean you end up paying more on your taxes this year, it will likely mean good things for you in the following year, once you have caught up on all of your payments.
If you are having trouble with debts to the IRS, you should consider consulting a tax advocate who can help you deal with manage your debt. This way, even if you are unable to pay off your IRS debt this year, you can work with the tax advocate to help you come up with a reasonable payment plan that will help you pay off your debt in a reasonable amount of time so that it won't have a significant impact on your future returns.
Pay Often and Early
You can increase your tax refund by staying up to date on all of your loans and payments. For example, if you have a mortgage that is due in January, you can get a credit for making your next payment before the end of the tax year.
If you are a contractor, you can also ultimately save yourself money by paying your quarterly taxes throughout the year. By keeping track of these payments, you could actually end up getting a return from the IRS when you file your federal return.
Have Health Insurance
Though Affordable Care Act plans may not seem as cheap upfront as a plan through an employer would be, you may be able to get a pretty generous refund if you have had insurance all year or if you at least have gotten insurance before the final day for qualified registration.
Similarly, many people are able to qualify for a refund if they have spent a significant amount on healthcare costs in that tax year. If you think you might qualify for this kind of refund and you had been holding off on scheduling a doctor's appointment, consider scheduling it before the end of the year so that it will qualify as part of your total medical amount.
Use Tax Software or Work With a Tax Preparer
Again, it can be nearly impossible for an individual to successfully navigate all of their options in tax refunds and credits. To make your experience easier, you should consider working with a professional or filing software. This way, you will be able to very quickly evaluate whether or not you are eligible for credits or breaks based on such factors as:
- Driving a fuel-efficient vehicle.
- Driving or traveling for work.
- Taking care of children or dependents, adopting a child, or taking care of someone with special needs.
- Making charitable contributions.
Using Your Refund
Once you have figured out a way to maximize your refund, consider how you can best put it to use. Some people will pay their refund forward toward their next year's tax return. This is an especially good option if you are a contractor and can make a reasonable guess about how much you will owe next year. Some people will apply it towards charity. Some people will invest it. Just make sure you use it wisely and reevaluate your tax status for next year make sure you are still getting all possible credits.