Tax return season is here again, everybody wants to get a maximum tax refund if possible. Most us have spent so much money during Christmas shopping for one thing or the other. Here is the time we can get some cash back via IRS tax refund.
Some of us know about tax credits like earned income and the child tax credit, but not many know how we can lower our taxable income and get a maximum tax refund. By knowing how many deductions you qualify for you can raise your tax return and bank out cool cash.Here are 6 ways on how to get maximum tax refund this year through deductions.
6 Tips on How to Get Maximum Tax Refund Through Deductions
1. Job Search Expenses
Are you looking for a job and you have sent some money travel here and there for job interviews either by road or flight? Here is how you can seize the opportunity of getting your tax refund from job search expenses you might have incurred last year.
If you documented your job search expenses, you might have got some tax deduction out of the deal. You can also deduct the cost of using career counselor, printing and mailing out of your resume.
However, note that you can only get a deduction that is more than 2% of your adjusted gross income that is, your total gross income minus specific deductions. For instance, let say, your adjusted gross income is $40,000 and you spend $3,000 searching for a new job, you can take a $2,200 deduction.
2. Education Expenses
As a student, this is best way on how to get maximum tax refund. Because one way or the other you have some education expenses which might include buying of textbooks, laptops, school bags etc. This alone can increase your tax refund by 5-20%.
You can process this deduction by submitting the 1098T form that you will receive from college. Most of the time it will be posted your school account and if not you can request for it from school while preparing for your taxes.
3. Medical Expenses
This is another wise way on how to get maximum tax refund. Medical expenses are one of the financial bottlenecks for all Americans especially for those of us that are above 30 year of age with very high health insurance.
You can get tax deduction if your medical expenses are above 10 % of your adjustable gross income and if you and your wife are above 65 you can get a tax deduction of 7.5 % of your adjusted gross income.
However, you can’t claim your premiums if they are pre-taxed. You may have to consult your employer to know your Medicare tax status. I highlighted here some of your tax-deductible medical costs;
- Copays and deductibles
- Payments made towards your medical, dental, and vision care (contacts and glasses)
- Orthodontics (braces)
4. Donations, Charity, and Church Contributions
You can deduct the money you gave to church, these include your tithes and offerings. This will be easy if you have your offerings and tithes record. Some church sent their members tithes record while preparing for their taxes.
Also if you donate cash or goods to a registered charity (Goodwill, the salvation army, feeding America..etc) you can claim the value of that donation on your taxes. But make sure you have all the receipts acknowledging your contribution
5. Vehicle Licensing and Your Car Mileage
Licensing a new vehicle can be very expensive. A $20,000 vehicle can easily cost you $2,100 to register. But the good news is that you can deduct all vehicles that you have licensed last year. This includes sales tax and tags.
You can also get maximum refund tax on your past recorded car mileage. As an employee you can deduct or expense the miles you drive.
If you know you can’t keep track of your car mileage you can download MileIQ app on your phone which automatically record every mile you drive.
6. Business Write-offs
This is another way of how to get maximum tax refund, especially for business people. Any costs that went towards your job or business can be deductible tax income. Example of business deductions are;
- Investment losses
- Car repairs (including oil changes) or mileage.
- Office supplies
- Phone or internet or office space in your home
- Hotel, Motel or food or any expenses for training or seminars if your employer didn’t reimburse you already.
Note: you can file your tax yourself to get more money on your taxes instead of paying any tax agency to file your taxes for you. Your do it yourself at the comfort of your home at TurboTax or Credit Karma. It easy for simple tax returns.
Recommendation: Make sure you keep all receipts for everything or a contribution letter for record purpose should in case you get audited in the future. The IRS can go back as far as 5 years on their audition.