Tips to Get the Best Tax Refund
From Adviceopedia
No one wants to give the Tax Man more than they have to and checking out tips to get the best tax refund will help you achieve this goal.
Contents |
Helpful Tips to Get the Best Tax Refund
The key to making sure you get the biggest refund you are entitled to receive is to educate yourself. Learn which tax deductions you qualify for and make sure you claim them on your tax return.
Look for Information Online
The Internet can be a great source of information on any number of topics, including tips on how to get the best tax refund. Give yourself some time to visit quality websites to get information about tax preparation and what deductions you can take. Good sites to check out are the ones being run by tax preparation companies and accountants. Examples of reputable online sites include:
Keep Detailed Records
Tips to get the best tax refund include keeping receipts for the items you claim on your income tax return. Rather than trying to sort through everything at tax time, a better choice is to set aside a specific location for your records. You can use an accordion file or a file box for this purpose. Some people buy a small filing cabinet that they use to store their tax information.
Claim Medical Expenses
Keep track of the premiums you pay for your medical and dental insurance throughout the year. You should also keep receipts for any healthcare services you received.
Keep Track of Charitable Contributions
Donations you make to charity are tax deductible, so be sure to keep the receipt every time you make one.
Open a Health Savings Account
A Health Savings Account (HSA) is used with a high-deductible health insurance plan. It can be bought through an employer or individually. The Internal Revenue Service (IRS) sets the level for the qualifying deductible annually. (For 2010, it is $1,200 for an individual and $2,400 for family coverage.)
The policyholder makes contributions to the HSA, which are tax deductible. The allowable contribution limit is set annually by the IRS. (In 2010, the limit for an individual policyholder is $3,050 and $6,150 for family coverage).
The money deposited in the HSA grows on a tax-free basis and it is used to pay for approved medical expenses until the annual deductible is reached. If the funds are used for this purpose, no income tax is payable on them. Using the money for another purpose means that they will be subject to a 10 percent penalty plus income tax. In 2011, the amount of the penalty for this type of withdrawal increases to 20 percent.
The money invested in an HSA can be used for retirement savings as well. If you withdraw the money after age 65, you will pay tax on it, but you will not be charged the penalty.
Put Some Money Aside for Retirement
Your contributions to your company's 401(k) plan or your own Individual Retirement Account (IRA) can be deducted from your income. Not only do you get a tax break on the year you make the contributions, but the money in your plan also grows on a tax-free basis until it is withdrawn.
Start a Business in Your Home
One way that you can qualify for several tax deductions is to start your own business. Once you do so, you can deduct a number of expenses related to earning income. If you are operating a home office, you can deduct a portion of your mortgage interest and utilities. Office expenses, such as your computer, phone, fax, and Internet service are also tax deductible.
If you use your vehicle for business purposes, you can take a deduction for mileage driven throughout the year. You can also deduct a portion of your car expenses, such as repairs, gas and oil on your return. The amount you deduct relates to the percentage of the time your car is used for business purposes. For example, if you use your car to earn income 20 percent of the time, you can deduct 20 percent of those expenses.
Use Tax Preparation Software
Tax preparation software can help you prepare your return correctly. This is a simple and economical option if you want to get your return filed but don't want to hire a professional to look after it. Choose a program that asks you a series of questions to help determine which deductions you are entitled to, such as ones for single parents.
Get Professional Help
If you don't feel confident about preparing your income taxes, you can get professional help. Depending on how complex your tax situation is, you can hire an accountant to prepare your return or go to an income tax preparation service.
The tax refund tips presented here are for general information purposes only. Please consult a tax professional for advice about your specific tax situation. generic viagra
