Search For Some Content
Search

Three Tips to Help Maximize Your Tax IRS Refund

Dec 20, 2023 By Susan Kelly

Suppose it is the time of the year when you are ready to file your tax returns. There are a few options that can help maximize your tax return. Most importantly, it depends on how much you allowed the tax deductibles to be during that year. A lot of families and taxpayers may come to situations where they reduce their deductibles. It might be due to some urgent need, a mortgage coming up, and so on.

No matter the situation, it is best to know different options. These options help you to maximize your tax IRS refund. Let's explore some of these options in this article.

How to Boost Your Tax IRS Refund

We pay taxes to support the government in building infrastructure, enhancing our living standards, and providing us with health and leisure facilities. Paying taxes at the appropriate is the only requirement. But sometimes, you can help the government by paying more than you owe. In return, you are getting getting returns at the end of each year. Paying more immensely helps the government if you also maximize tax refund in your report.

These tips help you support your government as well as get the best in return for your support.

Understanding Your Tax Filing Status

It isn’t common knowledge that you as an individual don’t need to apply for tax filing as a couple or family. You and your spouse can separately file your taxes, and here is why.

Married Filing Separately

It might be easier for a lot of couples to file and maximize tax return as a family. The reason behind it is that it does require a lesser amount of paperwork. But if you take time and have patience in filing individually, you can forego some factors. This can help you save on getting more returns.

If one of you has lost a job or is paying a heavy amount due to medical expenses, you can quickly get more deductions on the amount you owe each year. One such example of individuals losing jobs is the COBRA payments.

Child Tax Credit

If you are filing separately as couples but as individuals, you can get $2,000 as a credit against your taxes. This amount is for each child according to the American Rescue Plan, which requires your child to be under 17 years old.

Drawbacks of Separate Filing

You might not get some of the benefits that you would get when applying jointly, such as certain couple filing credits. It all depends on what you are planning to gain benefits, and you must weigh out each status benefit carefully. In some instances, you may get benefits if you are filing for income less than $200,000. If you have more income, then it is better to file as a couple.

The Option of Claiming Different Tax Credits

A lot of you might have taken tons of benefits when applying for multiple tax credits during the COVID-19 reforms. Most of those credits have expired and aren’t applicable anymore. Nonetheless, some tax credits are still applicable. Some of these tax credits are as follows.

Child Tax Credit

We have previously mentioned tax credits for children in the previous tip. In this section, we would like to add that since last year, in 2022, you are eligible for only a partial amount that you can refund. This eligibility will only happen if the tax credit that you calculate comes out to be quite large compared to what your tax bill shows.

The Credit for Child and Dependent(s)

In this scenario, if you have one dependent, you may get a 20-35% claim if you have to care for them, allowing you to work if it is essentially required. This percentage amount cannot be higher than $3,000. In the case you have more dependents, the amount is doubled, but the ceiling is fixed at $6,000.

The following individuals come under dependents:

  • If you have children that are under the age of 12 or below.
  • Your spouse needs medical care and attention. For such situations and individuals other than your spouse, they must be dependent for at least six months before it can become applicable.

Earned Income Tax Credit

The purpose of this tax credit is to support those who aren’t earning above a specific threshold. This will allow them to pay lower tax bills than they would typically would if they were earning sufficiently.

There are some challenging requirements, but you can get help from the interactive tax assistant if you want to understand whether you are eligible or not.

Increase Your IRA and HSA Contributions

You can open an IRA account so you can bring up the last tax year and make contributions to the IRA on this account. This amazing offer allows you to file your taxes early, rake in some of the tax credits we mentioned above, and quickly open this account according to your IRS refund amounts.

Another aspect of this contribution is that you can reap maximum contribution benefits if you are over the age of 50. At this age, whatever deductions you have enjoyed as deferred amounts will add up to the IRA, but it will be much lower now.

In the case of applying for and contributing to HSA, the following are some conditions.

  • As the Health Savings Account caters to people who have enrolled themselves in any health insurance plan, it can also reduce taxable income.
  • If you are enrolled in a plan that meets the IRS's limits, such as if you have to pay out of your pocket, and it matches the cost ceilings,

There are specific terms and conditions under which you cannot get any benefits from the HSA.

  • You have some medical coverages that come under the “first dollar” schemes.
  • You have a Medicare insurance plan.
  • Instead of being enrolled in medical insurance, you are listed as a dependent, such as mentioned above.

Final Thoughts

In these tips, the core concept is to take benefits from the government tax reduction plans while paying your IRS refund dues on time. You do need to consider what you owe and how much more you have already paid so that you can make proper claims for your deductions and credits.

Latest Posts
swiftnewsx
Copyright 2019 - 2024