Want To Amplify Your Tax Refund? Here’s How You Can Do It.

Tax filing season is on and April 15 is fast arriving! Many among us are already done filing the taxes and probably waiting for our refund check to arrive. Although it is more exciting than it sounds ...

Tax filing season is on and April 15 is fast arriving! Many among us are already done filing the taxes and probably waiting for our refund check to arrive. Although it is more exciting than it sounds to receive a huge tax refund, expecting one is not the best thing to do. The reason being, most of us fail to realize that a tax refund is practically our own money, but with a depreciated value (blame inflation among many other reasons). 

So, Should You Stop Waiting For Your Refund?

Not exactly. If you have paid more taxes than what you were liable to, waiting for a refund is understandable. But, why pay more taxes in the first place? Paying extra taxes undeniably comes with a line of unwanted repercussions, for example:

You are giving the government a loan and not earning any interest from it

Your money loses value by the time you get it back

You are not able to use your own money when needed. For instance, you cannot utilize it to pay off your debt, and

You could have simply saved or invested it 

The reasons mentioned above clearly state that instead of waiting for a higher refund, taxpayers can simply pay the right amount of taxes and not leave their precious money on the table. So, here are some ways to help you enhance your tax refund this year and every year that follows: 

There Are Deductions You Can Claim

We often take our tax deductions for granted. Most taxpayers who do not claim deductions are oblivious about them. But the fact is deductions reduce your taxable income. There are many types of tax deductions that can be claimed to reduce your tax due, such as charitable expenses, student-loan, health savings etc. For example, if say your income is $10,000 and you qualify for $1000 in deductions, your taxable income will be reduced to $9000. So you not only pay fewer taxes but you are also left with more money in hand. If you are not sure how to identify the deductions, you can either rely on professional tax software such as ProSeries tax software hosting and/or seek help from a tax professional or a CPA. 

Tax Credits Are a Real Thing

When it comes to reducing the tax due, you can either claim a tax deduction or seek a tax credit. There is a clear line between the two. Where a getting a tax deduction is easier, a tax credit is only applicable under special circumstances. Also, a tax deduction helps reduce your taxable income while a tax credit directly cuts down your tax due. For instance, if you belong to the low-income group and have kids or an elderly dependent on you, you can seek a tax credit from the government. Again your ProSeries hosting can help you determine what you qualify for. You can also seek help from a tax practitioner or your accountant. 

Your Filing Status Can Help Reduce Your Tax Liability

Using the correct filing status is more important than a lot of people might think. There are 5 clearly defined filing statuses for you to choose from: single, head of household, married filing jointly, married filing separately and qualified widow(er). Filers, in particular, who choose the standard deduction instead of itemizing, must be careful while choosing their filing status. It not only affects your taxable income but also the income tax bracket you might fall into. For instance, the standard deduction is different for single filers and the head of household, where the latter gets a higher standard deduction compared to the former. So in case you are single but supporting a child or your parent(s), you must choose to file as a head of household. Seeking professional advice prior to filing your taxes is better than paying extra. 

In Conclusion

There is no point in waiting for a bigger tax refund when you can pay the right amount of taxes. There are plenty of tax deductions, tax credits as well as exemptions that a taxpayer can qualify for. The best thing to do it to take advantage of the three so you can keep your hard earned money with you and use it to grow your business or take the vacation you were waiting for since long. To better understand the cuts you can make, Tax software hosting and a trusted advisor can be of help.