Three-quarters of Americans pay federal taxes every year. Many of those filers are overjoyed by the fact they’ll have an extra few months to file in 2020 due to hardships caused by current economic conditions.
Just because taxes are delayed doesn’t mean that they’re going away though. So whether you’re filing in April or July, getting the biggest tax refund is likely on your mind.
There are several things you can do to maximize the tax refund you receive at the federal and state level. Below, we share some tips so you can rake in as much money as possible!
1. Keep a Close Eye on Income and Expenses
Taxes are determined by how much money you make that is considered taxable. Typically, taxable income is made up of however much money you made, less expenses you’re able to write-off.
The best way to understand what you’ve made and what you can deduct is by keeping detailed records on all of the cash flowing in and out of your household. In most cases, your employer will manage that task by using a paystub maker to generate documentation that itemizes everything.
If you make some or all of your money through unconventional means though, you’ll need some sort of tracking workflow of your own.
2. Get Educated
Getting the biggest tax refund comes down to understanding what tax breaks are out there so you can claim them. With the growing trend of self tax preparation, understanding the basics of the tax code has become more important than ever.
While we wouldn’t recommend taking a whole tax course to maximize your breaks, it doesn’t hurt to hop online and do some light reading on common deductions people in your position are eligible for each year.
3. Track Your Vehicle Miles
One of the biggest lost opportunities when it comes to getting the best tax refund is tracking your vehicle miles. If you own a business, the miles you put on your car while working translate into deductions. Even if you’re an employee of a business, miles you put on your car to pick things up or get between job sites all equal savings.
There are several free mile tracking applications you can install from your phone’s app store that make logging your driving habits simple.
4. Defer Taxable Income
Doing simple things like contributing to an HRA or a 401K allows you to defer portions of your taxable income until a later date. See what income deferral opportunities exist for you and strategically leverage them.
5. Hire a Professional
At the end of the day, there’s no better way to save on taxes than getting an assist from a pro. Sure, professionals cost money. A good one will turn you onto more savings than what they charge though, which makes teaming up a great investment!
Getting the Biggest Tax Refund Is Well Within Your Reach
Whether you choose to self-educate to boost how much money you get back on taxes or turn to a pro, getting the biggest tax refund is within your reach. Just be willing to put in the effort, file your taxes on time, and enjoy the results.
If you’d like more advice on finance, check out additional content on our blog that covers the topic in-depth.