It’s never too early to make sure you’re taking advantage of every tax credit possible. With so many different credits and deductions, the easiest ones can slip right through your fingers. Here are a few easy ways you can boost your tax refund in time for tax season!
Reduce your withholding allowances
Reducing your “allowances” or salary doesn’t sound so good, but the payoff comes when you file your taxes! It is a simple process to adjust your withholding allowances. You can contact your Human Resources Department at work, fill it out online at the IRS Tax Withholding Page, or on paper with the worksheets and instructions provided by the IRS. Reducing your withholdings can lower the amount of money you receive each paycheck, so make sure you understand the trade-off.
Maximize your IRA
Did you know you have until the official tax filign deadline to open a traditional IRA for the previous tax year? This can help you save money for the future and get a tax credit. For 2018, you can deposit up to $18,500 ($24,500 for 50 years and older) in your retirement account. For those of you who are self-employed, there is a Simplified Employee Pension (SEP) that you can contribute up to $55,000 or 25% of your net earnings into. This contribution can also be deducted as a business expense. There is an additional bonus to saving for the future now! If you save for retirement you can automatically qualify for the Saver’s Credit worth up to $1,000 ($2,000 for those who are married filing jointly)!
Pay Next Year’s Expenses Early
Taxpayers who are watching their calendars can also improve their chance of getting a larger refund. IF you pay January’s mortgage payment before December 31st, you can get the added interest for your mortgage interest deduction. You Can also pay property taxes by New Year’s Eve or make your 4th quarter ETP in December rather than in January, increasing your itemizing potential.
Learn Something New
Whether you want to take a class to learn a new skill, improve your existing skill set, continue your education, or simply love learning, there may be a tax deduction for it! The Lifetime Learning Credit (and college credits) rewards individuals with moderate income for valuing education by allowing them to claim a tax credit of 20% of the tuition expenses, up to $2,000 in tax credits!
If you need help planning your taxes and credits for the 2018 filing season, Polston Tax can help. We know every tax deduction and know which ones will work best for your financial situation. Call us today at 844-841-9857 or click below to schedule a free consultation!