Tax return season is always a time of the year that you can receive an unexpected boost to your income. Tax season is always a trying time for all concerned, especially if you are self-employed. Hours upon hours of time are spent organising all of your receipts, revenues and expenses in order to complete your tax returns for the year. When you have paid all of the tax that you owe, it can generally be quiet a large sum. Therefore, it is nice to regain some of this hard earned money back in the form of a tax refund.
Whether you use this money to pay some of your bills, add to your savings or to treat yourself to something nice, everyone wants to maximise the amount of tax they get refunded. In this day and age, there are even certain tools that you can use to try and accurately estimate the size of your incoming tax refund, which allows you to plan your spending accordingly and plan well in advance.
Here is some advice that you should keep in mind when it comes to maximising the size of your tax refund in the future.
Increase your withholdings
When you first start working in a job, you are required to fill out a W-4 IRS form, The reason you fill out this form is to determine how much of your periodic pay check is withheld to be paid towards your income tax obligations. This final figure is based on the amount of exemptions on which you are entitled to claim. When you claim more exemptions, you will have a less amount of money that is withheld for tax purposes.
If you are in the position where you want to maximise the size of your refund, you should go to the human resources department of your company and ask them to make a change to your W-4 form. By reducing the amount of exemptions on the form, the amount that is withheld from each and every pay check will be larger. This means that in turn your tax refund will also be larger. You do need to check your company’s policy as some places only allow you to make changes to the form during a certain period in time.
Remove any and all donations
If you make charitable donations, you can avail substantial savings when it comes to your taxes, at the same time as helping out a great cause. This makes a big and profitable difference when it comes to your refund. Any and all forms of charitable donations are able to be made as tax deductions and will decrease the size of your tax bill. There are a few restrictions that you do need to keep in mind. For example, the organisation needs to have the appropriate non-profit tax status called 501 ( C)(3). The majority of organisations will clearly state on their websites or on their literature whether or not they have this status.