Maximize your tax refund
Your money has been waiting patiently in state and federal treasuries, playing Angry Birds and reading the same issue of Men’s Health over and over again. But now it’s time to bring your money home!
Time is running out to file your income tax returns, so here are a few tips to ensure as many of your little green friends as possible make it home this spring.
- Plan in advance. This one might be off the table for this year, but it’s never too early to start planning for next year. You should begin by keeping accurate, organized records. It’s also important to remain informed of tax laws and how they could affect you.
- Deduct for charitable donations. There's no denying that giving feels good (except for giving blood, which makes me feel terrible no matter how many shortbread cookies and juice boxes they press into my numb hands). And luckily the IRS wants to reward you for your charitable donations in the form of a deduction. Just make sure you give to a tax-exempt organization that can provide you with a letter detailing the donation. Your roommate’s bongos are a good place to start.
- Deduct for losses occurring due to disaster or theft. The key to this deduction is that the event that caused the loss must be “identifiable, unexpected and unusual.” This includes car accidents, natural disasters and vandalism, but it does not include natural deterioration or your house cat’s unwavering belief that picture frames, vases and collectible plates belong on the floor, not the shelf, thank you very much.
- Deduct for job search expenses. You can only deduct for expenses accrued on the job hunt if you’re seeking the same position, but with a different company. First-timers and people looking to shift into a new industry are, unfortunately, out of luck. Be sure you keep receipts and records for every cost associated with the process. Related costs could include printing and mailing résumés, transportation to and from interview locations, and fees paid to employment agencies. Phone calls to and from your prospective employers are even tax-deductible, though you should probably still avoid the urge to call every 20 minutes to ask if they’ve hired you yet.
- Take the time to know what deductions you qualify for. So maybe your bike was stolen because you forgot to chain it up, or maybe your Uncle Carl isn’t exactly as “tax-exempt” as he claims to be. You may still qualify for certain deductions! Do you pay interest on a home mortgage? Do you pay union dues? Do you have to purchase and clean your own uniform for work? Familiarize yourself with the available credits and deductions for the tax year to ensure you’re not cheating yourself out of extra cash.
According to reports, the majority of filers simply use the standard deduction rather than itemizing – which can leave many feeling short-changed. So keep in mind that if you just can’t be bothered with all of those numbers and decimal points, you can hire a professional do the legwork for you! Just remember: It's your money.
Note: This guest post was written by Jesse Campbell, counselor for Money Management International.