During a tax season, many wonder how to get a tax refund instead of paying taxes. To increase the chance of you being refunded, there are several things you can consider doing. This will also ensure that your tax deductions are not being taken for advantage by tax accountants. Always ensure you plan early and stop running when the year is almost over.
Donating to a Charity
Expenses or charitable donations related to volunteering can be deducted from one’s income at tax time. Be keen in ensuring that you save all your receipts and ensure you are keeping track of all the miles you are travelling. Keenness must be applied whether you are working for charity sake or on behalf of an organization.
Contribute to IRA or 401K
Most people are thinking the only reason for contributing to a retirement fund is ensuring they are independent financially as they age. This is true, but one can also have short-term tax benefits. In most cases, the money one puts towards his/her IRA or 401K is not included in the taxable income. IRA/ 401K are also tax deductible and have helped many people in improving their living standards.
Buying a Primary Residence
In owning a house, there is a clear tax benefit. The interest you are always paying on your mortgage is all tax deductible. For the several first years, mortgage payments have gone towards interest. This radically decreases the gross income that is adjusted at tax time.
Claiming Education Credits
In tax deduction, students tuition and or loan interest may be used. The credit includes Life Time Learning Credit covering up to $2,000 per tax return. It also grants American Opportunity Credit covering up to $2,500 yearly for four years.
Investing in Solar Energy
If you are working on improving your home, adding solar panels to your list should be considered. Solar will assist homeowners in earning up to 30% of their installation in tax credits costs. Ensure you hurry as those credits may decrease with time. Solar panels are advantageous in that they are cheap and thus many people afford to buy.
Starting a Home Business
Starting a business and maintaining it in your home will assist you in getting a new source of income. It will also give you a chance of taking all deductions of your business generated income. The deductions may include portions of your mortgage, business expenses, repairs, utilities and business start-up costs. The business will also minimize loss of income as one can closely manage the business. It will also cut down renting costs and thus gain maximum profits.