Tax Tips For A Bigger Return

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It’s tax time again and chances are you don’t need reminding.  Although the deadline is ingrained in the every taxpayer’s mind, many still find reasons to put off filing until the last minute. If you still haven’t started don’t stress, just follow these tips to get the biggest return possible in the fastest way possible.  

Think About Itemizing

Chances are you have become accustomed to taking a standard deduction when filing your taxes.  However, you might be able to get a larger refund if you choose the itemized option.  Did you buy a home this year?  Buying a home is one of the most popular reasons to itemize, but there are a whole slew of others. Did you pay union dues this year?  Did you pay for a uniform or have continuing education expenses?   An out-of-pocket, un-reimbursed job expense may be your golden ticket to a larger refund.  Taking the time to calculate if your itemized deductions total more than your standard deduction amount can greatly increase your return.

Charitable Contributions

Another benefit to itemizing your taxes is that you are able to claim the charitable donations benefit. If you made sizeable donations did you hold on to the receipt or retain the bank statement to prove it?  You should have some form of written documentation in your records if you made a sizeable financial contribution to a qualified organization.  Keep in mind that for donations of property there are many regulations relating to the fair market value of non-cash donations.  You may also run up against fair market value if you purchased a ticket to a charity gala or event.  For example, even if you paid $75 to attend a charity event, the IRS may actually deem the fair market value of that very ticket to be only $25.  The difference of these two figures is the total contribution you will put on your tax return.

Refundable First-Time Homebuyer Credit

The first-time homebuyer credit is the big daddy of tax credits.  You’ve probably heard about this credit on your local news station.  If you bought a home between April 8, 2008 and now and have not owned a home before, you may claim a refundable credit on this year’s tax return. The credit is equal to 10% of the purchase price of the house; however, the maximum credit available is $7,500.  It should be noted, however, that this type of credit is nothing more than a “loan” from the government and must be repaid. Generally, the “loan” is repaid over a 15 year period in $500 annual payments. The maximum credit is not available if your modified adjusted gross income falls between $75,000 and $95,000, or between $150,000 and $170,000 if you are married and are filing a joint return with your spouse.  

Educational Tax-Breaks

With the current state of the economy, many professionals are choosing to go back to school to get an advanced degree.  The types of educational expenses that are tax-deductible include textbooks and tuition.  You may even be able to deduct the cost of travel to-and-from the educational institution you attend. Work-related educational expenses are also deductible if certain requirements are met; perhaps, you were required to take some continuing education classes or pursue a professional designation related to your current job.  There are several eligibility requirements for these itemized deductions, but it is worth looking into if your employer has required you to attend job-related classes.

 

 

 

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