It’s that time again! You will soon be filing your 2019 tax return and will want to get as much as possible out of it, all the while paying as little as you possibly can.
So, how do you go about maximizing your tax return without any need for too much extra effort? Here are some helpful tips to keep in mind.
Be aware of tax deductions
Taxpayers in the USA can use a paycheck calculator from Paycheck Guru to find out how much money they can save through various tax deductions for which they qualify. However, it is important to be aware of what these tax deductions are.
For instance, you will need to determine whether you are better off claiming the standard deduction or taking the time to itemize your deductions separately. If you opt for the latter, there is a wide range of deductions to look into, including mortgage interest deductions and charitable donations deductions, to name a few.
Ask your boss to hold off on your bonus
While you were probably hoping to spend it during the festive season, by asking your boss to hold off paying in your bonus until the beginning of 2020, you won’t have to pay tax on it immediately. This can be a big relief for many who may have spent a little bit too enthusiastically over the December period.
Do a good deed
As mentioned above, you can deduct charitable donations from your tax return. This includes any money that you spend on gas traveling to the charity’s premises. The festive season is the perfect time to do a good deed and give back to the community – and you will also reap the benefits when filing your return.
Boost your skills
Any money that you use Taxpayers further your education usually qualifies for a tax deduction. This is true as long as you pay off the tuition by December 31st. In doing so, you may be granted a valuable tax credit of up to $2,000. This is known as the Lifetime Learning Credit.
Look into Other Dependent Credit
Other Dependent Credit (ODC) may also apply to you. For instance, you may qualify for this credit if you are currently supporting a loved one, such as an elderly parent or grandparent. Basically, supporting anybody who isn’t your own child, and who meets the criteria as a non-child dependent, could qualify you to benefit from this valuable tax credit. It is worth up to $500, which can reduce the taxes you owe dollar-for-dollar by $500.
Spend your FSA
Even though the rules have changed and you won’t forfeit all of the money left over in your Flexible Spending Account like before, it is important to know that you may only be able to carry over $500 worth of what is left in your 2019 FSA account at the end of the year. If you have more than that remaining, do your best to spend it before 31 December 2019.
With the aforementioned tips in mind, you are sure to capitalize on your tax return. Here’s to a fruitful and successful year ahead!