The article below is up to date based on the latest tax laws. It is accurate for your 2019 taxes (filed in 2020) and 2018 taxes, which should be filed by the April 15th, 2019 (or October 2019 with filed extension) deadline
With the tax deadline months behind you, you likely 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:
1. Adjust your W-4 withholding allowances: If you owed money at tax time, it is time to review your tax withholding from your paycheck and adjust your withholding allowances on your W-4. Reducing your withholding allowances will increase your income tax withholding so your paycheck will be less, but the payoff will come next spring when you don’t owe money and you may even get a tax refund instead. TurboTax W-4 withholding calculator can help you easily figure out how many personal withholding allowances you should take to boost your tax refund or your take home pay.
2. Keep track of tax deductions: Wouldn’t it be nice if you could open a file and the documents you need to file your taxes are 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. Knowing what tax deductions were eliminated under the tax law changes and ones you can still take can help you plan and save at tax-time and even if you don’t know, TurboTax will help you claim the ones you’re eligible for at tax-time. If you’re self-employed you can track your income, expenses, mileage, and capture your receipts year-round with QuickBooks Self-Employed. That information can then easily export to your TurboTax Self-Employed tax return.
3. 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. Here are a few tips to help towards the retirement goal:
a) You can contribute up to $19,000 in 2019 to your retirement account. However, if you are age 50 or over you can make catch up contributions up to $6000 which increases the total contribution to $25,000.
b) If you are self-employed, you can contribute to a Simplified Employee Pension (SEP) IRA up to: 25% of your net earnings up to a total of $56,000 for 2019 and your contributions can be deductible as a business expense. You can also contribute up to $6,000 ($7,000 if you are 50 and older) to your IRA and receive a tax deduction for your contribution.
c) Another reason to save is, you may automatically be eligible for the Savers Credit worth up to $1,000 ($2,000 married filing jointly). The Savers Credit is a little-known tax credit that lower to middle-income taxpayers can get just for contributing to their retirement and because it’s a tax credit, it will reduce the taxes you owe dollar-for-dollar.
4. 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 may be eligible for the Lifetime Learning Credit. You can claim a tax credit of 20% of your tuition expenses, up to $2,000 per tax return. 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.
5. 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.
Following these easy tips will help you get more money and boost your next tax refund!
Don’t worry about knowing these tax rules. TurboTax asks you simple questions about you and gives you the tax deductions and credits you’re eligible for based on your answers. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can also review, sign, and file your tax return.