Tax time is here! Boost your refund when you file with these five easy steps.
Can you believe tax time is already here? We know a bigger tax refund can really help out, so here are some steps you can take to boost your refund when you file.
Itemize Your Deductions
The standard deduction is $12,400, so it’s tempting to claim that rather than tracking down receipts and tax forms so you can itemize your deductions. But itemizing might be worth it if you’re a homeowner with a sizeable mortgage, gave money and “stuff” to charity, or paid points when you took out your mortgage.
Additionally, if you’re an educator, you can deduct up to $250 of school supplies even if you don’t itemize deductions. Start gathering information right away to make filing easier.
Claim Education Expenses
If you’re paying college expenses for yourself, your spouse, or a child, two education credits can help defray those costs: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC is a partly reimbursable credit for 100% of the first $2,000 of education expenses you pay and 25% of the next $2,000. The Lifetime Learning credit (LLC) is 20% of the first $10,000 of education expenses. The AOTC is eliminated once your income exceeds $90,000 and the LLC at $68,000.
There are other differences as well, so weigh your options carefully in deciding which credit to claim. Gather the data you’ll need to claim the deduction, and consider prepaying tuition or other costs down the road to get the maximum credit possible.
Claim Credit For Your “Full House”
If your adult children, their significant others, and friends have come to live with you, you may be eligible to claim a $500 tax credit for non-child dependents you support if their income is less than $4,300.
You can also claim the credit for parents you support, even if they don’t live with you. Set a reminder to speak with a tax professional and look into claiming these credits before you file.
Contribute To Tax-Deductible Retirement Accounts
This is a way to save for your future and boost your tax refund. If your income is under $65,000, you may qualify for a Saver’s Tax Credit as well. That’s three different benefits from the same action. Check to make sure you’ve made contributions to your 401(k) within the necessary timeframe. It’s also important to check the deadline for contributing to an IRA and claiming the Saver’s Tax Credit before you file.
Deduct Worthless Investments
If you have an investment whose value is less than what you paid, sell it before the year-end to claim a capital loss. If someone owes you money that you can’t collect, you can claim that as a bad debt deduction as well. Write a description of the debt that includes the name of the debtor, the amount and the date the debt was due, and any relationship between you and the debtor. Describe the efforts you made to collect, and why you think the debt is now worthless.
Bonus Tip: File Your Tax Return On Time
You won’t get a tax refund until you file your tax return. But really, even if you aren’t required to file a tax return because your income is low, file anyway to claim your refund for taxes withheld and any refundable credits you’re entitled to. If you wait more than two years to file, the IRS will not issue you a refund.
Even though the tax deadline has been extended to June 15, 2021 for Texas residents, it’s important to file your taxes as soon as you can.
As an A+ Federal Credit Union member, you now have more choices with special savings options this tax season. We’ve partnered with TurboTax® and H&R Block® to help you file your way and get special member savings.