Are you leaving money on the table when it comes to your taxes? Our guide to maximizing your tax deductions will show you how to save money and get the most out of your tax return. From business expenses to education credits, we'll help you uncover every deduction you're entitled to. Don't miss out on potential savings - read our guide today!

Key Points:

• Tax refunds are based on such factors as filing status, credits and deductions.

• One can magnify their tax deductions by the itemization of allowable deductibles and credits.

• Seeking professional help outside of your regular Accountant.

• Maximizing the contributions to IRA and health savings accounts each pay.

Maximizing Your Tax Refund: A Guide

  The task of preparing one's tax return is not typically seen as enjoyable, but the possibility of receiving a significant refund can make it worthwhile. In order to optimize your refund, it is important to file strategically.  

Avoid Errors:

In addition, it is crucial to ensure that your tax return is free from any mistakes that could result in financial losses. To prevent this, the following techniques can help maximize your refund for the year 2024:  

Utilizing the Standard Deduction:

Your standard deduction and the income thresholds for certain credits and deductions are determined by your filing status. Using a different status could greatly impact the amount of your tax refund.

  For example, an individual is permitted to declare themselves as a qualifying widow(er) within the first two years following their partner's passing. This classification essentially increases the standard deduction that one would get if they filed as a single person.  

Understand YOUR Best Filing Status:

In most cases, filing jointly is the recommended choice for married couples.

  In limited cases, choosing to file taxes separately may result in saving money for a married couple. This may occur when one partner has significant medical expenses that they want to list individually. In such a scenario, the combined income of the couple could make it difficult to itemize, according to Adams.  

Dependent Deductions:

Individuals who declare dependents on their tax return have the opportunity to receive a $2,000 child tax credit for each dependent who is under the age of 17. This credit is fully accessible to single filers with incomes up to $200,000 and married couples filing jointly with incomes up to $400,000. However, those with higher incomes may still be eligible for a partial credit.  

Child tax credit:

It is a common practice to claim the child tax credit, but do not forget about the opportunity to obtain another tax credit for your expenses on day care.  

Dependent care:

The child and dependent care credit offers a maximum of 35% for the initial $3,000 spent on eligible care for one child, or $6,000 spent on eligible care for two or more children.  

In order to receive the full credit, individuals must have an income below $15,000. As income levels increase, the percentage gradually decreases and reaches 20% for those earning $43,000 or more.

  Eligible costs may encompass childcare, programs for before- and after-school, summer camps for children and athletic camps (except for overnight camps). In order to be eligible, the care must be provided in order for you to be able to work.  

Disabled child:

Although the majority of individuals typically attribute this credit to children who are 12 years old or younger, it is also feasible to claim it for older children with disabilities or even an elderly parent.  

Adopted child:

In 2023 the adoption credit is a credit that adjusts for inflation and amounts to $15,950 in 2023 and increases to $16,810 in 2024. If your modified adjusted income is less than $239,230, you can claim this credit on form 8839 for Qualified Adoption Expenses. The credit phases out between MAGIs of $239,230 and $279,230 in 2023.  

Employee Deductions:

The 2017 Tax Cuts and Jobs Act brought about a notable rise in standard deductions, leading to a decrease in the number of individuals who choose to itemize. Nonetheless, if you have considerable charitable donations or medical costs, it would be beneficial to explore the possibility of itemizing your deductions in order to potentially save money.  

Itemizing Deductions:

If it is not logical to itemize your expenses this year, think about how you can adjust your spending in order to have the option to itemize in a future year. One popular method is to combine multiple years' worth of charitable donations into a single year.  

Donations:

Establish a donor-advised fund can address the itemization issue. This allows individuals to make a significant initial contribution for generous purposes. While this deposit can be listed on tax returns, the funds can then be allocated to various charities over a span of time.  

Tax Deferred Saving Funds:

Contributing to pre-tax accounts is one of the most effective ways to reduce taxes and save money. Retirement funds, as explained in this article, are a popular method for achieving this financial goal.  

Although it may be past the deadline to make contributions to your workplace 401(k) in order to reduce your 2023 tax bill, you still have the option to fund an IRA until the tax filing deadline on April 15, 2024. Individuals under the age of 50 can contribute a maximum of $6,500 for the 2023 tax year, while those over 50 can contribute up to $7,500.  

It is important to confirm that you are making contributions to a conventional IRA, rather than a Roth IRA. While contributions to Roth accounts are not eligible for tax deductions, these IRAs offer their own set of tax advantages.  

Moreover, the eligibility to deduct IRA contributions for individuals with a workplace retirement plan, like a 401(k), gradually decreases for single and head of household taxpayers when their modified adjusted gross income exceeds $73,000. As for married couples filing jointly and qualifying widow(er)s who have workplace plans, those earning $116,000 or less are eligible for the full traditional IRA deduction.  

Health Savings Accounts:

By having a health insurance plan that meets certain criteria, individuals have the opportunity to reduce their tax burden by depositing funds into a health savings account (HSA). Such accounts enable individuals to set aside funds for healthcare expenses, and they offer triple tax benefits. Contributions can be deducted, the balance in the account can grow without being taxed, and withdrawals are tax-free as long as they are used for eligible expenses.

  Similar to a conventional IRA, tax-deductible deposits can be made into an HSA until the tax filing deadline.

  In the tax year of 2023, individuals who have a qualified family health insurance plan can receive a deduction of up to $7,750 for their HSA contributions. For taxpayers with individual plans, the maximum deductible contribution is $3,850. Additionally, individuals aged 55 or above can make an extra $1,000 in deductible contributions regardless of the type of insurance they have.    

  As a result of the 2022 Inflation Reduction Act, you could potentially receive a tax deduction for any upgrades that have enhanced the energy efficiency of your household. 

This allows individuals who made energy-efficient improvements, such as installing new windows, exterior doors, or adding insulation, to still receive a credit on their upcoming tax return.

  To ensure eligibility for claiming a credit for energy-efficient home improvements, retain all documentation for each purchase in the event that the IRS requires verification.

  The Internal Revenue Service is not required to conduct an audit. They may simply reach out to you for further explanation.

New Tax Professional for Fresh Eyes:

If you have been utilizing the services of one tax specialist for a long period of time, it could be beneficial to have a new perspective on your tax return. Over time, a tax accountant may not actively seek out potential savings opportunities.

A fresh financial specialist could offer a more thorough examination of an individual's tax circumstances and potentially adjust previous tax returns to obtain higher refunds from prior years.

 Clients have received a few thousand dollars after seeking assistance from The Tax Clinic in reviewing their tax returns.

 It is important to keep in mind that the tax laws are constantly evolving and your chances for potential savings may vary each year, regardless of whether you enlist the help of an accountant or handle your tax return independently.