Posted by James Financial Services Inc

Making the Most of Your Tax Return

Making the Most of Your Tax Return

The economy is tighter, the pandemic is out there, money is not forthcoming, yet taxes are not lowered. However, there are ways to divert some taxes from the Internal Revenue Service (IRS). Thus taxpayers are researching methods to get a return on filed taxes. This act is legal, and the only penalty it attracts, if accurately done, is putting some money in your pocket.

But before initiating this method, you must verify if your taxable income is qualified for tax deductions and credits or itemizable. Here are some legal ways to make the most of your tax returns.

Aim for Potential Tax Deductions

While filing your credits and deductions, focus more on credits because they attract more tax returns. But you have to adhere to the requirements before implementing this method. Unlike credits, deductions only minus some figures from your taxable income. There are two methods of filing – standard deduction & itemizing. Most taxpayers are leveraging on standard deductions because the yields are twice the figures after the implementation of Trump’s tax plan. It’s also easy. 

You have to itemize if you have tons of deductible expenses such as an office or business expenses if you're self-employed, on a student loan investment, gambling losses, and mortgage interest. The deductible figures vary. Ensure your figures tally with your backup claims like receipts and bank statements.

Donate To Non-profit Organizations

The charity is a way to make the most of your tax return, but you will have to apply the itemizing method. The deduction is possible according to the Taxpayer Certainty and Disaster Tax Relief Act enacted in 2020. Married individuals using the standard process can enjoy not more than $600 as joint returns. Those favored by the standard procedure can also have a share but not exceed $300 as cash contributions. These contributions were enforced to provide requirements for charities in 2021.

Travel Expenses

You can have a brief trip for work and still pay less tax. Your tax is deductible as travel expenses. Travel expenses are deemed necessary and ordinary as people move around for business, jobs, or professions. If your boss reimburses you for your travels, you can keep that as deductible tax. FYI, this money must be refunded, meaning you can't tamper with your income or travel expenses. You can't make deductions from your travel income if you are not a force reservist, a recognized artist, an employee with work-related deformity, a local government official, or fee basis state official. Elementary and secondary school staff can enjoy up to $250 each year.

Max Out Your IRA

Investing in an IRA is an active way of making the most of your tax return. You can file your IRA for each year before the deadline. The figures may be fully or partially deductible. The fun part is these deductions are enjoyed in most methods of filing.

The Retirement Saver's Credit has allowed you to enjoy tax credit on your contributions to traditional and Roth IRAs. There are specific criteria to enjoy this offer. Aim for accuracy when filing your tax. Every little figure can accumulate to be more significant, especially when aiming for a tax refund. You can enjoy more money if you know where to get deductions.

Student loan interest

A student also has tax deductibles. There are two ways to get this offer via student loans. However, these loans should be used for tuition, accommodation, books, board, and other reasonable school expenses. You must be a part-time enrollee studying for a degree or recognizable certificate. However, your parents must file the tax; you can withdraw the interest. The interest is considered a parent-student package by the IRS. You can have up to $2,500 as an independent student.



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