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Top Tax Tips For the Spring
Springtime can be a great time for a fresh start, and that includes your finances. As tax season approaches, it’s important to have a plan in place to ensure you’re getting the most out of your tax return. Whether you’re a small business owner, an investor, or simply someone looking to maximize their tax return, these top tax tips for the spring are sure to help you maximize your tax refund. Learn how to take advantage of deductions, reduce your taxable income, and get the most out of your return this season. With the right strategies in place, you can ensure that you’re getting the most back from the government this season.
Maximize Your Deductions
One of the most important things to remember during tax season is to maximize your deductions. Many deductions may be familiar to you, but you may be able to increase your tax refund significantly if you are not familiar with the various deductions available to you. Deducting certain business expenses can significantly reduce your taxable income. These include anything related to running your business, including travel, materials, and even parking costs.
If you are self-employed or run your own business, one of the most important deductions you can take is for travel and transportation expenses. If you operate a car service, for example, you may be able to deduct a large portion of the cost of operating your business. This can include gas expenses, maintenance, repairs, and even car washes. If you are self-employed and travel often for work, you may also be able to deduct these expenses as a way of keeping your tax burden lower.
Take Advantage of Tax Credits
Tax credits may surprise you. You may be surprised to know that credits like the earned income tax credit, or EITC, are available to you. This credit helps to offset income taxes for lower-income individuals and families. To be eligible for this credit, you must meet certain income requirements. If you are a single person who makes under $16,000 per year, or a family of four who makes less than $32,000 per year, you may be eligible for this credit. The EITC has become one of the most popular credits because it can significantly reduce your tax debt.
Reduce Your Taxable Income
While credits like the EITC are great, you should also take steps to reduce your taxable income. When you file your taxes, you have the opportunity to reduce your taxable income by itemizing deductions. Many deductions are easy to overlook, but you do not have to take the standard deduction if you choose to itemize.
The most common itemized deductions include:
Medical Expenses – Medical expenses can include care for a family member or other medical issues, including prescription drugs or dental work. If you have a significant medical expense, it may be worth it to itemize in order to take this deduction.
Homeowners Insurance – If you have a mortgage and a house, you may also be able to deduct a portion of your homeowner’s insurance. This can significantly reduce your taxable income.
Charitable Contributions – You may also be able to take a charitable deduction if you make contributions to a charity during the year. This can significantly reduce your taxable income.
Self-Employment Dividends – If you are in business for yourself and earn a portion of these profits as self-employment dividends, you may be able to take a tax deduction. This can reduce your taxable income significantly.
Self-Employment Retirement Contributions – If you are self-employed and contribute to a retirement plan, you may be able to take a tax deduction for this contribution. This can significantly reduce your tax burden.
Mileage – If you drive your car for work, you may be able to deduct a portion of your gas and vehicle maintenance expenses. This can significantly reduce your taxable income.
Other Deductions – You may also be able to take other deductions, including those for insurance, home ownership, and more. Be sure to review your tax return to see if you can reduce your taxable income further.
Consider Professional Tax Help
Even if you use tax software, it may be worth it to hire a professional tax preparer to help you with your taxes. Tax software may be able to handle most of your deductions and credits, but there are many that may be overlooked. A tax professional can help you to ensure you are taking the most popular deductions, as well as ensure you are receiving the most from your taxes.
It can be helpful to have a professional help you with your taxes if you have any special issues with your finances or unique financial situations that may need to be taken into account. There may be some deductions or credits that you do not take because you don’t think you qualify for them. A professional can help you to make sure you are getting the most out of your taxes.
Take Advantage of Tax-Advantaged Accounts
Tax-advantaged accounts may not seem like the most exciting tax tips for the spring, but they can significantly reduce your tax burden. Some of the most common tax-advantaged accounts include 401k, IRA, and Roth IRA accounts. These accounts are extremely popular with investors because they offer a way to save for retirement. Investors can contribute money to these accounts, and once they hit a certain amount, they can take them out and invest it in a variety of ways. With a Roth IRA, for example, you are able to take out your contributions and invest them in a wide range of ways, including stocks.
Prepare Your Tax Return Early
While most people wait until the last minute to file their taxes, it is important to file your taxes early. This allows you time to make any necessary corrections.
Take Advantage of Online Filing
Finally, it is worth it to consider filing your taxes online. This allows you to take advantage of a number of benefits that may not be available to you if you file by paper, including access to tax software and the ability to make major corrections to your return.
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