Now that your tax return has been filed, you’re likely ready to put taxes out of your mind until next year. But wait! If you want to maximize your tax refund next year, here are some things you can do now:
- Reduce your withholding allowances: If you have owed money in the past, it is time to review the allowances you claim at work. Reducing your allowances will increase your income tax withholding so your paycheck will be less, but the payoff will come next spring when you’ll get a tax refund instead of owing tax. Ask your Human Resources Department for your W-4 form to get started. You can also use TurboTax W-4 withholding calculator to make it easy to see how many withholding allowances you should take to boost your tax refund — or your take-home pay.
- Keep track of deductions: Wouldn’t it be nice if you could open a file and everything you need to prepare your tax return is there? Here’s a simple way to make that happen. Prepare a file and label it “Current Tax Info”, and tuck it into your desk drawer. Now, every time you see something during the year that’s tax deductible, drop it into the file. Some deductions are going away for tax year 2018 as a result of the new tax reform law, but don’t forget about expenses for college courses, student loan interest, childcare, and charitable contributions (if you itemize) are still tax deductible. If you’re self-employed you can track your income, expenses, mileage, and capture your receipts year-round with QuickBooks Self-Employed.
- Save for the future: It’s never too early or late to start investing in your retirement. If you haven’t started saving for the future, now is a good time. You can contribute up to $18,500 ($24,500 if you’re 50 and older) in your retirement for 2018 and lower your taxable income while building your nest egg. If you are self-employed, you can contribute to a Simplified Employee Pension (SEP) IRA as much as 25% of your net earnings or up to $55,000 for 2018 and your contributions can be deductible as a business expense. You can also contribute up to $5,500 ($6,500 50 and older) to your IRA and receive a tax deduction for your contribution. There’s another plus to contributing to your retirement. You may automatically be eligible for the Saver’s Credit worth up to $1,000 ($2,000 married filing jointly) just for making a contribution to your retirement account.
- Learn something new: Maybe you want to learn a new career, update your skills in your existing career, or study a subject you are interested in just for the heck of it! No matter your motivation, if your income is moderate, you are eligible for the Lifetime Learning Credit as well as college credits. You can claim a tax credit of 20% of your tuition expenses, up to $2,000 in tax credits. You don’t need to be on track for a degree – the cost of any class that you take at the college level is eligible for the tax credit. Don’t worry about knowing these tax laws. TurboTax will ask you simple questions and figure out the education tax credit or deduction you are eligible for.
- Clean out your closets and donate to charity: In addition to creating new space in your life, you can take a quick tax deduction for the fair value (or thrift shop value) of household goods that you no longer use or books and magazines you give to the library. TurboTax ItsDeductible can help you accurately value and track your charitable donations.
Following these easy tips will help you get more money and boost your next tax refund!